U.S. Flirting With Disaster: Debt Ceiling + Ongoing Budget Resolution + Sequester + Ridiculous Leverage Gambling + Low Growth + Low Inflation + Long Term Unemployment+ Insane Gov’t Spending And Borrowing + Declining S&P 500 Cash + Poverty Trap
January 15th, 2013
What Happens If The Markets Crash In 2013?
GOLDMAN: Hide Your Kids, The Sequester Is Coming
Goldman’s Alec Phillips writes in a note that the automatic spending cuts required by the so-called “Sequester” (the spending caps imposed by the 2011 debt ceiling deal) are now a matter of “when” and not “if.”
He examines the sequester as part of the broader fiscal triple threat that we’re seeing right now: Debt ceiling + ongoing budget resolution + sequester.
While the debt ceiling has the potential to do the most damage, from a probabilistic standpoint (because the debt ceiling is unlikely to be breached) the sequester has the most potential to do real harm.
Allowing the sequester to hit would, in our view, have greater implications for growth than a short-lived government shutdown, but would not be as severe as a failure to raise the debt limit. Although Republicans in Congress generally support replacing the defense portion of the sequester with cuts in other areas, there is much less Republican support for delaying them without offsetting the increased spending that would result.