NOTE - When this was originally posted it had a video of Congresswoman Waters making a fool of herself. Unfortunately the original video was pulled - I did find it on RCP -
Here is the transcript (Waters can barely pronounce sequestration - but even with that she does read a script pretty well - even if she does not understand the numbers) -
Yesterday we did have Mr. Bernanke in our committee and he came to tell us what he’s doing with quantitative easing and that is trying to stimulate the economy with the bond purchases that he’s been doing because he’s trying to keep the interest rates low and jobs – and he said that if sequestration takes place, that’s going to be a great setback. We don’t need to be having something like sequestration that’s going to cause these jobs losses, over 170 million jobs that could be lost – and so he made it very clear he’s not opposed to cuts but cuts must be done over a long period of time and in a very planned way rather than this blunt cutting that will be done by sequestration. As you know in this committee we have all of HUD and HUD is responsible for so many programs that determine the quality of life for women and families. CBDG, a form of grant programs will be cut by $153 million dollars, these are grants that help with cities and children and low-income programs. We also will cut the Home Program by $52 million if sequestration takes place, Native American Housing grants by $34 million, House and Choice grants $113 million, Public Housing – mostly single women in Public Housing – another $304 million, and homelessness, everybody claims to be concerned with homelessness and the growing number of women and children who are out their homeless but look they will take a $99 million dollar hit and on and on and on. We are here today, one more time, talking about women and children and families and how we can protect our women, children, and families and have a decent quality of life – sequestration will set us back, all of the gains that we have made will be lost with sequestration.
Every politician makes gaffes. Yesterday Maxine Waters (D-CA) commented that if sequestration were to take place 170 million jobs would be lost. At some point later she corrected herself and figured out that the "projected" number is 750,000. About half of the total population is in the workforce so it is possible that the original number was so off as to include not only all the US workforce but a portion of the population that is not normally considered in the workforce. From my perspective it is not that the Congresswoman made a dumb mistake.
Obviously, the loss of jobs depends on Keynesian assumptions that government spending improves growth and growth employment. If we learned anything from the first four years of this president (and even the last two of the last) that piece of wisdom is nonsense.
blog which suggests that as we move the percentage of GDP spent by the government down, growth is likely to increase.
What bothers me about this tape is the tone and the substance of her remarks. I suspect Ms. Waters has only a light involvement with economics. But her statement says, we heard from Chairman Bernanke and he said that if the sequester is allowed to go into effect the economic "recovery" will be slowed. For my money, there are a couple of responses. First, what economic recovery? Growth after this recession has been puny. We have thrown tons of imaginary cash (40% of the budget is debt financed) at solving the problem and except for the delusional thinking in Washington, this is the worst recovery in several decades. Normally, with a steep decline, you get a bigger response out of the trough - and that has not happened.
Second, is the exaggeration. The President met with congressional leaders yesterday for seven minutes - yet he has made half a dozen campaign stops around the country. If the peril were real it would seem he would be working hard to solve the problem. The Senate GOP tried to give the president more discretion in making reductions but under instructions from the White House, the Senate democrats rejected that offer. The Senate democrats also tried to pass a "deficit reduction" measure (which was defeated. The measure (this could only be done in DC) would have actually increased the deficit for the first three years.
Third is the failure to understand the impact of a 2% cut. Every employee, especially those making under the wage cap for Social Security, faced a 2% cut in wages this year with the reinstatement of FICA to its normal rates. That policy, which was abetted by the GOP, was wrong and we should not have lowered the rate. Regardless, that 2% cut came in and workers are still going to their jobs.
Unfortunately, not a lot of Americans are listening to this debate. They should be. Not just for the entertainment value of gaffes but for the underlying assumptions used by both sides to press their case.