Entitlements on the Table
Looks like another interesting week. President Obama is renewing his offer to cut Medicare and Social Security as a way of compromising with Republicans on the budget. Just one catch: if they want to cut entitlements, Republicans must go along with more taxes - an idea they continue to reject. The sequester - now in effect - cuts just about everything but entitlements - which gobble up a lion's share of federal spending.
What IS the sequester?
Because Congress and the President couldn't agree on how to cut spending, the sequester does it for them. Some $1.2 trillion will now be cut from federal spending, automatically, with the cuts spread out over a decade. Half will come from defense, half from everything else - again, except for, ironically, the biggest driver of federal spending of all, entitlements.
How much will spending cuts hurt the economy?
Both sides are spinning this, of course. House Speaker Boehner told theWall Street Journal last month that the sequester “threatens U.S. national security, thousands of jobs and more.” But Sunday on NBC's “Meet the Press” he changed course: “I don’t know whether it’s going to hurt the economy or not.”
The White House cites the non-partisan Congressional Budget Office, which projects 750,000 jobs could be lost due to spending cuts. White House economics advisor Gene Sperling told ABC’s “This Week:” “When you have those types of harsh spending cuts in such a short, concentrated period of time, it is like saying to somebody, ‘You can cut off three of your fingers, but you can have the flexibility to choose which ones you want to cut off."
Jobs & Unemployment Reports Due Friday
Speaking of jobs: analysts predict the economy added 160,000 jobs in February, and think the unemployment rate will remain 7.9%. The broader rate is 14.4% (that includes unemployed people who aren't looking for work, and workers who can only find part-time jobs).