The Washington Free Beacon reported today that in the fourth quarter of 2012, the U. S. Gross Domestic Product fell .1 percent. This is the first decline in three years.
The article reports:
“The number isn’t as bad as it looks,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts, whose team projected a 0.3 percent gain, the lowest in the Bloomberg survey. “This really was a story about a payback in national defense spending. Consumer spending growth picked up, fixed investment was fairly strong.” […]
Government outlays dropped at a 6.6 percent annual pace from October through December, subtracting 1.3 percentage points from GDP. The decrease was led by a 22.2 percent fall in defense that was the biggest since 1972, following the Vietnam War.
Meanwhile, everyone in Washington is blaming everyone else.
The Hill reported today:
Carney said economic observers were “rightly appalled” by the threat of sequestration or default to drive a debt deal, and charged that Republicans were harming the economy to the benefit of the wealthiest Americans.
“It can’t be we’ll let sequester kick in because we insist tax loopholes remain in place for corporate jet-owners,” Carney said.
Brendan Buck, a spokesman for Speaker John Boehner (R-Ohio), pointed the finger of blame for the still-looming sequester back at the White House.
“These arbitrary, automatic cuts were a creation and demand of the White House in 2011,” said Buck. “Twice the House has passed legislation to replace them with common sense cuts and reforms. If there was any uncertainty late last year about the sequester, it was because the Democratic-controlled Senate, per usual, never lifted a finger to pass a plan to replace it.”
Let’s back up a minute. The Senate has been operating on continuing resolutions since 2009 because they have failed to pass a budget. These resolutions allow them to keep the spending at the 2009 levels. We are going into debt at the rate of more than $1 trillion dollars a year because of those continuing resolutions. Has anyone considered the impact of runaway spending on the financial health of the nation? Has anyone considered the fact that businesses are holding their breath waiting to see what the impact of Obamacare will be? Has anyone considered that Americans knew at the end of last year that their paychecks would be smaller after January 1st?
We are now more than four years into bad fiscal policy. At some point that fact will be recognized (even in Washington). The answer, unfortunately, will not come until the 2014 elections. At that point Americans will have to decide whether to continue on our present path or try something different. I strongly suggest we try something different–controlling spending and passing a budget would be a great start.