25 Feb

A normal person’s (as in non-politician’s) perspective on the Sequester… Or How I Came to Love the Sequester

                                       

Everett Dirksen famously said “A billion here, a billion there, pretty soon, you’re talking real money.” If his billion here and billion there added up to $44 billion then he’d have been talking about the Sequester that seems to be everywhere in the news today.

For those not familiar with the Sequester, it is the mandatory cut in federal spending set to take place on March 1st. President Obama essentially warned that the country would likely come to a screeching halt if the mandated cuts actually occurred. Among the damage would be: thousands of teachers and firefighters losing their jobs, 800,000 Defense job losses, nursing home cuts, cuts to Medicare, airports close, hundreds of thousands would miss out on flu vaccinations and cancer screening. Apparently the Myans were just off by a couple of months.

Back to the real money… $44 billion is a lot of money. That’s the kind of money Mark Zuckerberg looks at and goes “Wow”. When you imagine that the Sequester is going to cut that much from the federal budget that seems like a lot… until it’s not.

In 2012 the federal government spent $3.538 trillion. If nothing is done and the Sequester kicks in, in 2013 the federal government will spend $3.553… yes, that’s right, $15 billion more! Somehow, President Obama is trying to suggest that if the country does not figure out how to dodge this $44 billion Sequester bullet, the foundations of our society are going to come crumbling down upon our shoulders. (The total 2013 “cut” includes the aforementioned $44 billion plus $41 billion cut in future years but attributed to 2013.)

That simply makes no sense.

To put this in some perspective, imagine that instead of talking about trillion dollar federal budgets here, we use numbers in the form of your paycheck. Let’s imagine that your family had an income of $50,000 in 2012. While it might have been a challenging year, that’s up 15% from the $43,600 you earned in 2009. (Remember, we’re using government spending as the measure here. If we were instead using actual household income numbers, the $43,600 you earned in 2009 would have instead shrunk to $41,500 by 2012 rather than growing to $50,000). In 2013 you are expecting a .4% raise, taking your income up to $50,211.

Given those numbers, are you going to spend a week knocking on your neighbor’s homes telling them they have to demand the homeowner’s association roll back the dues because you only received a $211 raise this year? Are you going to call your relatives and tell them that you are going broke and that you may lose your house because you only got a $211 raise this year? Are you going to go to your boss and tell him that you’re probably going to have to stop working if he doesn’t give you another $500? Probably not.

If your situation were really as dire as the president suggests and that you were really in danger of losing your house, you’d probably find ways to cut your budget. Even if $40,000 of your expenditures were somehow shielded from cutting – In the case of the government cuts, they are mostly coming out of discretionary spending, half from defense (other than war funding) and half from the rest of the budget. That means that things like Social Security and Medicare payments are mostly exempt – you’d still have a pool of $10,211 from which you could cut the necessary $500. You might not like it, but you could probably eat at McDonalds more often and Chipotle less often. You might rent movies on Netflix rather than go out to the movies as often. You might even buy generic vegetables rather than Green Giant. At the end of the day you would probably figure out how to limit yourself to spending $211 more than you did last year without doing too much damage to your lifestyle.

But then you’re probably not Barack Obama. The president and his administration have suggested a wide range of disasters that will befall the American people if the Sequester goes into effect: There will be a shortage of meat, 125,000 people might become homeless, thousands of FBI would be lost, 100,000 kids would lose Headstart or childcare benefits, terrorist cables would go untranslated, workplaces would be less safe, the Pacific naval power would shrink by a third, firemen and police around the country would be cut, and nuclear waste would pile up. The president suggests all this will occur and much more. Indeed it seems as if America might simply collapse into anarchy if the president doesn’t get tax hikes passed.

Of course none of that actually has to happen. The president has the power to apply the cuts wherever he wants within the discretionary programs themselves. One might think that rather than closing national parks the president might look at cutting things like the Department of Energy program that spent billions of dollars on companies like Solyndra and Fisker. Instead of cutting job training for veterans the president might look at cutting the Obamaphone program that is providing free phones to millions of ineligible recipients. Or maybe instead of threatening to spend less money fighting terrorism he could figure out how to stop providing unemployment benefits to prisoners sitting in jails around the country. There is no doubt substantial waste on the military side as well, and rather than threatening to limit soldier’s training perhaps the president could reconsider giving tanks and fighter jets to the Islamists running Egypt.

But that’s not the Obama way. The president would rather scare the dickens out of the country rather than face any limits on his orgy of spending. The Sequester is indeed a blunt instrument. It is however a tool for cutting government growth. Certainly not by enough. Certainly not in the most rational manner possible. But at least they are cuts – if only to the increase in spending.

The Sequester reminds one of the Base Realignment and Closure Commission program which was inaugurated under President Reagan. This was a program where expendable military bases were targeted for closure. Congress was forced to either take it or leave it and thus provided members with a way of escaping blame when a base closed in their districts. It too was a somewhat blunt instrument, but it worked. Given that the Sequester was the president’s idea in the first place, he should stop the demagoguery and embrace the opportunity to take a first step to getting a handle on government spending. Indeed, he should offer another Sequester, or a series of them that make actual cuts in spending rather than just phantom cuts in expected increases. By shielding members of Congress from the slings and arrows that sometimes follow cuts in programs that impact their districts, he would likely find greater support than he would in any item by item battle. Not pretty, but it could be effective. Not likely either because doing anything that actually benefits the country rather than Barack Obama would be unlike Barack Obama.

About Vince

The product of a military family, growing up in Naples, Italy and Guantanamo Bay, Cuba, and being stationed in Germany for two years while in the Army, Vince spent half of his first quarter century seeing the US from outside of its own borders. That perspective, along with a French wife and two decades as a struggling entrepreneur have only fueled an appreciation for freedom and the fundamental greatness of the gifts our forefathers left us.
This entry was posted in Barack Obama, Congress, Economy, Obamanomics, Politics. Bookmark the permalink. Monday, February 25th, 2013 at 3:55 pm
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2 Responses to A normal person’s (as in non-politician’s) perspective on the Sequester… Or How I Came to Love the Sequester

  1. johngalt says: 1

    Sad that no one has posted here yet, Vince. Perhaps it is because we, as a country, are too stupid to realize when we are pointing the gun at our own heads.

    Yes, even if the full S-word happens, our federal government will still end up spending more than it did last year. For reference, if this was a family and it’s incomes and spending, it would be akin to having grossed $75k for the year, but spending $100k, with $25k going on credit cards and various loans. Then, the next year, while you may end up with a 3% raise, and make $77.25 for the year, you still would end up spending the previous years $100k, plus an additional $420 over the course of the year. And sure, you ended up putting less on credit for the new year, by a couple thousand $$$ or so, but you are that much closer to not being able to pay the bills due to the maintenance costs of all of that debt. Bankruptcy proceedings become all that much closer.

    And still, even with the S-word happening to it’s full extent, the Fed Reserve is still going to be printing dollars at the rate of $85 Billion per month for the foreseeable future, swelling the bubble on the worth of the dollar even more. How soon before that bubble pops?

    ReplyReply
  2. Nobody of Import says: 2

    But Obama DOESN’T want the sequesters or the cuts. That’d mess up the Liberals’ plans for all of us to render us serfs under their Oligarchy (And if you don’t think that’s the plan…think again and look a lot closer next time…)

    ReplyReply

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