- What Happens if U.S. Doesn’t Cut Spending?
by Greg Hunter’s USAWatchdog.com
Everybody is talking about the cuts in government spending with the $85 billion in forced spending cuts in military and social programs. $85 billion amounts to little more than a 2% cut in $3.8 trillion (or $3,800 billion) in federal spending per year. Didn’t most working Americans just suffer a 2% pay cut with the expiration of the Social Security tax holiday? How many times have we heard that thousands of government jobs will be lost to sequestration? The so-called Great Recession destroyed at least 8 million private sector jobs, and if you count the underemployed and discouraged workers, it’s easily 23 million.
Why are government employees being considered as some sort of sacred cow? What many are feeling was summed up with a recent comment on the USAWatchdog.com site from “Chuck O.” He wrote, “I’ve retired after 44 years working. Throughout the entire period, I lived through no fewer than 10 lay-offs and cut-backs. I have yet to see any appreciable lay-off or cut-back in the federal work force (EVER). I feel it is about time “they” should take a “hit.” How about a 20% cut back on ALL salaries? “They” need to share in the austerity. We all should have the same insurance benefits, too. “Their” retirement program and health insurance is way out of line; cut it back. A 20% cut would be way better than NO PAY at all. 20 % could really help lower the debt. I’m really getting KILLED by this money printing. In the 12 years I’ve been retired, my dollars have lost more than 30 % of their purchasing power. Obama’s crew hasn’t a clue. My wife and I have BOTH had to go back to work at 70 years old.”
With foreigners increasingly shunning Treasuries and the dollar, the only way to keep all those government jobs is to raise taxes on the private sector or print money. The Republicans caved on tax increases at the beginning of the year, so that option is closed. Now, we are left with the Federal Reserve’s “open-ended” money printing operation that creates $85 billion a month out of thin air. A little more than half of that amount ($45 billion) goes to buy Treasury bonds to finance the federal government. The rest ($40 billion) goes to the continued banker bailout that buys their sour (and I think fraudulent) mortgage debt. The money printing is what’s causing Chuck O’s “30%” loss in purchasing power for his retirement dollars. As the money printing continues, the buck will buy less and less.