It appears these Sequester cuts are going to happen so I’ve started thinking ahead, 3-6 months down the road, and asking myself how Obama will react once the monthly Unemployment data and Q1/Q2 GDP numbers are reported. The more I think about it, the more I realize that this Sequester Cut legislation may be seen as the turning point for America (and that could be either a turn for the worse or a turn for the better).
It is my belief that the effects of the $85 billion Sequester cuts will not be measurable in a $16 trillion economy. Those cuts amount to 0.5% of the US GDP which is within the margin of error so unless I’m way off on the multiplier for the Government portion of our economy, the Sequester cuts will be a non-factor with regard to short term economic data.
But that won’t stop the Left and Right from placing a huge correlation (or non correlation) between the Sequester cuts and these future economic reports. This Sequester Cut/Tax Increase issue is so polarizing, Dem and GOP Party members will not be able to restrain themselves after fresh Economic data is released. After each new Economic report, we’ll then see a Politician grab a microphone to proclaim how their position on the Sequester is being validated in that report.
Our political parties have drawn a Maginot line over the Sequester cuts so like it or not, every new economic report for the next 3-6 months will need to have a Sequester tie-in.
Over the coming months, one of the following scenarios will happen:
Scenario #1 – Unemployment and Q1/Q2 GDP data show the economy as ‘flat’ or growing
This is the worst case for Obama but the best case for the American people. Obama will now have to admit that the Sequester cuts were really not that big of a deal and he was just fear mongering about the damage these minimal cuts would inflict. The American people will realize that Obama was using Alinsky Rule #9 (“The threat is usually more terrifying than the thing itself”) and now that they finally stood up to the bully, they will not hesitate to do it again.
With Obama’s primary weapon (fear) nullified, Independents will give more credence to what the GOP is saying versus what Obama and Team Fearmonger are saying. In 2014, Republicans can solidify their control of the House and even some of the spineless GOP members might muster some courage to stand up to the Dems. Maybe the house will propose MORE spending cuts since the 2012 Sequester cuts worked so well for the US Economy!
Best case? This could really be the turning point for the GOP as more Americans open up to Fiscal and Economic Conservative principles.
Scenario #2 – Unemployment and Q1/Q2 GDP data shows a contraction of the economy and maybe even a double dip recession
This is the worst case for the American people but the best case for Obama. Now Obama can point to the House GOP as the ones who ‘forced’ the Sequester to happen (even though we know whose fault it is) and caused hard working Americans to lose their jobs and plunge America into yet another economic crisis. You can hear the State Run Media (SRM) being all too anxious to parrot this propaganda (Chuck Todd won’t be able to contain himself). The SRM will forget that economy was already showing signs of weakness before the Sequester cuts kicked in nor will they mention that the economy could also be weighed down with Obamacare looming on the horizon. Nope, the SRM will be consistent in their blame for the economic crisis – Republicans allowing the Sequester cuts to hit because they wanted to protect the wealthy 1% from another income tax hike.
Obama will blame-storm the GOP right up until the 2014 elections, the House will fall back into Democratic hands and that will be GAME OVER. Do not pass go. Do not collect $200. You sank my battleship. Checkmate.
Obama will have carte blanche to raise taxes, increase spending for entitlement programs, pass Cap-And –Trade and pass other freedom robbing legislation like stricter gun control laws. There will be nobody to stop Obama for the final two years of his Presidency and that will just about seal the deal by placing American on a firm path to Greece/Destruction.
The Economic reports over the coming months will be like a high stakes game of chance and even if they aren’t aware, America is “All-In!” I guess it’s sort of fitting that in this politically polarized time, our future as a nation will be determined by a piece of Legislation that has little to no effect on the real economic outcome of our country.
Time to roll the dice!