LITTLE ROCK — One in fi ve Americans paying for his or her home owes more on that home than it’s worth.
That’s at the high end of current estimates. For the sake of argument, let’s say things are only half that bad. OK. One in 10 Americans buying a home owes more on it than it’s worth. Note that half the worst estimate is still awful.
To get specifi c, here’s Laura Tyson, former chairwoman of the U.S.
President’s Council of Economic Advisers: “Real median household income is still nearly 7 percent below its 2007 peak, real median household net worth dropped by 35 percent between 2005 and 2010 and remains signifi cantly below its pre-recession peak, and about 90 percent of the income gains during the recovery have gone to the top 1 percent.”
No one should need reminders of just how bad the crash of 2008 was or how slowly we’re climbing out. Judging by news accounts, though, Congress could use a reality check.
People in it fuss, fume and blame each other for the slow recovery as if they were somehow relevant to it.
Our fussing Congress is about to make itself relevant. It’s going to do this by letting automatic spending cuts - sequester - kick in on March 1.
More by default than design, we’re fi nally going to set a budget course. We are going to cut the budget and see what happens - probably, anyway.
“Sequester” is one of those corners that Congress loves to paint itself into.
Congress gave itself a deadline with automatic spending cuts. It appears Congress isn’t going to make a last-minute deal.
They really seem ready to pull the trigger this time.
Sequester would slice everything except Social Security and Medicaid by 5.1 percent and military spending by 8 percent.
Those are percentages for the total spending in this fi scal year. Note, however, that the U.S.
government’s fi scal year ends Sept. 30. That means your government’s been spending its way through this year’s budget at its regular rate for fi ve months already. Therefore, the full extent of those cuts will have to come out of the last seven months of spending.
Your government is going to have to step on the spending brake pretty hard.
Suppose this happens.
Economic eff ects, particularly on markets, will come immediately. Political fallout won’t lag far behind.
The first polls on the public’s reaction could start flowing through the news within hours. Solid fi ndings will come within days.
The Republicans in Congress are confi dent that Democrats there and President Obama will get the blame. Democrats are confi dant Republicans will get the blame. Note the 100 percent confi dence sequester will be somethingfor which blame will be deserved.
One side or the other is about to have its myths busted. Nothing could be as revolutionary to our Congress as a reality check.
Sequester could settle more issues than the last election.
I should point out the Keynesians - the ones who believe government spending should go up in bad times - lost the battle but won the argument in Europe. The austerity enforcers at central European banks now openlyadmit that their policies, or at least the extent of them, made things worse.
I think economic reality is no respecter of borders, and whatever long-term gain sequester might yield won’t cover the short-term fallout and related political losses for Republicans.
The bigger issue is the very things that drive federal deficits are the things sequester won’t touch: The great big entitlement programs of Social Security and Medicaid. Those programswill take up an even bigger share of our federal budget if sequester goes through.
When interest rates climb off the fl oor, interest on the national debt will be another infl exible, growing part of any federal budget.
So the good news is Congress may fi nally have to cope with a little reality.
The bad news is the reality’s getting harsher and harder to deal with all the time.
DOUG THOMPSON IS A POLITICAL REPORTER AND COLUMNIST FOR NWA MEDIA.
Opinion, Pages 14 on 02/17/2013