In 8/11, the Republicans and Democrats cut a deal to raise the debt limit by $2.4 trillion. Part of that deal was to create a Congressional Super Committee (6 Republicans and 6 Democrats) to cut $1.2 trillion in spending over 10 years. All they had to do was cut a puny $120 billion a year and they couldn't even do that on a $3.7 trillion budget. The Super Committee of 12 was a big fail. But another component of the deal was that in the event they failed to agree on spending cuts then hundreds of billions in defense cuts would automatically kick in.
Top Defense Dem: GOP Must Blink First To Avoid Pentagon Cuts
“Sequester” is a technical term for an enforcement mechanism built into the 2011 debt limit law....While the defense cuts are actually quite puny and span a decade, the Republicans are in an absolute panic. The Republicans refuse to cut defense spending. The Democrats refuse to cut social spending. And crazy Romney has vowed to increase defense spending by at least $2.1 trillion according to CNN (where the money is coming from, Romney doesn't say).
In the event of its failure, though, the law included a penalty — including hundreds of billions of dollars to cuts to both defense programs and Medicare providers — meant to force members of both parties to deal with budget deficits in a balanced way.
It failed anyhow.
Defense spending to spike $2.1 trillion under Romney
But here's the real kicker: The Bush tax cuts that Obama agreed to extend 2 years expire on January 1, 2013. Now the Dems are playing hardball and vow that they will not extend the Bush tax tax cuts.
Democrats threaten to go over ‘fiscal cliff’ if GOP fails to raise taxes Washington Post
The Democrats play hardball Politico
Senator Murray Says Democrats Will Let Tax Cuts Expire The New York Times
Senator Patty Murray of Washington, a member of the Democratic leadership, said on Monday that her party is prepared to allow all of the Bush-era tax cuts to expire and for automatic spending cuts to kick in unless Republicans give up their opposition to tax increases on the wealthy....Of course, the real tragedy is that neither the Republicans nor the Democrats have any intention whatsoever of ever cutting spending.
Mr. Obama agreed to extend all the expiring tax cuts for two years in exchange for his own payroll tax cuts and an extension of unemployment benefits. That two-year extension expires Jan. 1, which is also when more than $1 trillion in across-the-board spending cuts to defense and domestic programs over 10 years begin.
What makes the whole issue so fascinating is that it's election year and each dishonest party will shamelessly pander to their respective bases. The Dems will shout "we're gonna tax the rich" and the Republicans will shout "we love spending too, especially on senseless wars, but we prefer to do it with debt rather than taxes".
Either way, America gets royally stiffed because neither party is willing to solve our immense problems. Taxing the rich won't restore our economy and in fact will only make the economy worse but deficit spending on the wars will also expedite our national bankruptcy as well as be economically devastating.