At the outset of the 113th Congress I had thought it impossible for this Congress to be shorter on results than the 112th. Initially, the Congress did nothing and thereby allowed the “Sequester” to happen. They have since tinkered with parts of it principally to allow the most well-off Americans to make scheduled flights without delay. At this stage since the major impacts of the Sequester have yet to be felt, it’s not at all clear how things will look by the end of the year. The continuation of the Sequester has at least delayed the Federal Reserve Bank from reducing the rate at which it pumps money into the economy through the Quantitative Easing (QE) Program. This may not be a good thing.
The Federal Reserve Bank has been buying bonds at the rate of $85 billion per month. This means that we are effectively printing new money at that rate. Many are concerned that these actions are excessive and will trigger an inflationary spiral longer term. When the Federal Reserve Bank started this program there was a significant deflationary stress on the economy. Credit was hard to come by, and the average citizen was not buying much anyway. These earlier conditions have changed, and the Federal Reserve Bank should be gradually reducing if not abandoning QE. The delay seems to be due to not knowing just how much deflationary stress the implemented Sequester will bring back into the economy. The Sequester yet might be relatively harmless if the Federal Reserve Bank is able to begin reducing QE and phase it out eventually. These are really big ifs, and we won’t likely know how much trouble we are in (if any) until at least early 2014.
Since completing this back door legislation, in effect allowing the Sequester to happen by doing nothing, the Congress has managed to do very little. They have, of course, held hearings. Those held by the Senate primarily to question Secretary Clinton on Benghazi, and questioning nominees Hagel & Brennen. Other than that the Senate has managed to vote down consideration of gun control legislation. Other items are on the agenda, but hardly moving forward at all.
On the other side of the Hill the House has managed very little. They are holding hearings as well. It’s early yet — only about 6 months of activity — yet both the House as well as the Senate has little to show for their time in office. The performance is actually pathetic and seems unlikely to improve as we all try to brace once again for a “debt ceiling” discussion.