better if i hadn t had that one cookie. is that basically what the sequester is here? there s just danger and it s as you say where are you looking from? i m looking at the point of view of the average american trying to earn a paycheck and trying to stretch that paycheck. if we see consumer confidence go up and spending more money but there s no more money coming in, some of this is also phantom money. we saw this before the housing bubble burst. when housing values go up, regular americans suddenly think that they have more money so they re going to spend more. there s confidence there. but is it real? let s not forget that equity in a home is vaporous, it s phantom, it s not real as people found out. but again there is very much the sensation with americans that, wow, the housing market is doing good so this is good. the economy is good, the stock market is doing good. if you own and you have invested well in the market, then you re doing pretty well, right? if you had a home and
especially in parts of the country where the defense industry is big. virginia, maryland. exactly. and it was supposed to be so politically unpalatable it would never go into effect and they d have to cut a deal. so it s not just poor people getting hit. there are a lot of people in washington on the republican side who would be perfectly happy to slash programs for the poor, but everything has something in the sequester for everybody to hate. it s per sifing because nobody can come up with something that they find more politically palatable. that said, the size of the sequester is about half a percent of gdp so it s a significant austerity measure but it s not enormous. you can compare it to bigger measures that we did on purpose. the expiration of the payroll tax cuts and expiration of part of the bush tax cuts. those are about twice as big as its sequester and we seem to be weathering this fiscal austerity much better than europe. and the deficit is coming down. this is the ot
dramatically. i tried to coin the term the golden age of deficit reduction. guilded age. never before have we had so much deficit reduction. it s coming in at 640. no one contemplated that magnitude. let s not forget the poor, giant corporations. federal government contracting is a major piece of business in this country, so you ve had cisco systems come out and say our sales aren t going to be so great because of the sequester. ibm, ge, booze allen, these are people who in large measure subsist on defense department contracts. they re not getting them and to me it s sort of amazing. we re not surprised that the political system is not responsive to the poor. so that s part of what was we are surprised that it s not responsive to the rich. this is what is interesting about the wall street journal piece this morning. part of it s claim is that you end up with these folks who
so you do hurt corporate america because a lot of the profits of agribusiness, a lot of the profits of places like walmart are actually tied to the spending that goes right back into the economy. josh, you were talking about the political palatability of it. is that what it is? there s nothing more politically palatable or because people enjoy seeing deficits go down and are willing to say at least we ve got one indicator that economically makes us feel strong and capable? there is bipartisan consensus in washington that people want deficit reduction. we saw this in the way the president negotiated at the beginning of the year. he was trying to come up with an alternative deficit package. no, obviously he d like a package that shifted away from near term cuts in discretionary spending and toward entitlement reform and tax increases. republicans don t want any tax increases. what s in the sequester is more palatable to them than anything to raise taxes, even though half of it falls
industry employment. if they put that benchmark up a little bit, then more people wor spending. but it happens because of organized labor, right? so it s not in other words, corporations figure this out because labor organizes and it says if you don t, then we ll strike. there has to be that counter. part of what walmart has been very clear about is their unwillingness to have their workers to have that organization. i don t think that s the only way to have that happen. i think you can just have a very strong labor market where there s a lot of demand to hire people and employees can demand high eer wages. you have to pay more to get good workers. i don t think we can depend on companies to create that. i think the government has to do that. i think the federal reserve has been trying very hard. the reason we haven t had big negative economic effects from the sequester is the fed came in and got very aggressive right at the time congress was imposing fiscal austerity. but i thin