Sequester: A Destructive Solution To A Non-Problem

Two years ago, the newspapers and TV pundits were warning about a vast "debt crisis."

There never was a debt crisis. There were substantial deficits resulting from the economic collapse from our real estate bubble. Economic collapse and resulting loss of jobs triggered increased expenditures on the social safety net and reduced revenue.

This was not a problem - it is a feature of our economy. It is called "counter-cyclical" expenditure, and is designed to moderate the business cycle and prevent the economy from going into a tailspin. This time, the economic collapse was so severe, it took additional measures to avoid a collapse.

It could have been worse. Much worse.

By now, it could be much better, had we acted on a scale required by the situation. But especially after the 2010 election, the House of Representatives, under Republican leadership, did everything they could to sabotage recovery.

In early 2011, the newly sworn-in Republican House threatened to shut down the government if they didn't get their way.

The result was the sequester bill.

Just as recovery was beginning to happen (though more vigorous recovery efforts would have speeded things up), the sequester is now kicking in. As a nation, we are pressing on the brake while trying to accelerate up the on-ramp of recovery.

Bad idea.

Here's what I had to say about it two years ago.

The underlying problem isn't getting better.