In a January 24, 2013 breakfast speech, Gen. Raymond T. Odierno warned his audience that “Today, the greatest threat of our national security is fiscal uncertainty.” (www.army.mil/article/95007/Jan242013CSAremarkstoAUSAILWBreakfast/)
Alan Blinder, former vice chairman of the Federal Reserve, and co-author of a very popular Economics college textbook, believes that although the fiscal cliff was serious, the “debt ceiling is scarier.” Allowing the economy to go over the fiscal cliff would have resulted in a 4.5 percent contraction of GDP. The upcoming debt ceiling impasse could shrink GDP by more than 6 percent, force a 26 percent reduction in government spending, and a “swift descent into recession.” Blinder said that “At current rates of spending and taxation, federal receipts cover less than 74 percent of federal outlays.” (Wall Street Journal, The Debt Ceiling is Scarier than the Fiscal Cliff, January 14, 2013)
“Why would they [illegal immigrants] vote for a party that is going to cut taxes they do not pay, but take away government benefits they do receive?” Patrick J. Buchanan
As the country is reeling from the electoral loss and the re-election of President Obama, half rejoicing and the other half in stunned disbelief, the economic reality is beginning to sink in.
People chose the promise of Santa Claus and Christmas every day of the year. Government Santa is likely to slow down in delivering unearned freebies as the economy worsens.
The Dow Industrials reacted immediately to the re-election by dropping more than 300 points. All other indexes also dropped more than 2 percent the next day. The finance and energy sectors will be the hardest hit by the promised increased regulation.
The upcoming 2013 budgetary fiscal cliff has prompted some in Congress to consider sequestration in disaster relief in order to save money. Sequestration is simply defined as automatic spending cuts.
The Congressional Research Service has published a report, “Stafford Act Declarations 1953-2011: Trends and Analyses, and Implications for Congress.”(Bruce R. Lindsey and Francis X. McCarthy, August 31, 2012)