Sequestration: Smoke and Mirrors

Sequestration is due to hit at the beginning of March… pushed back from the beginning of January.  These are automatic across-the-board spending cuts to our national spending.  It was passed in the summer of 2011 as part of the debt ceiling deal.  A group of bipartisan legislators was supposed to come up with $1.2-trillion in budget cuts, and if they couldn’t, then the sequestration was to take effect in its place.  The sequestration, which does include defense cuts, was supposed to be so bad that it would force both sides to work together to find something better.  However, the group of legislators failed to find common ground and the sequestration was set.  It was only pushed back to March from January as part of the fiscal cliff deal reached on January 1… hoping that the new Congress could come up with a better plan.  In these two months, neither party has seemed that focus on the impending cuts.  During the presidential election last year, President Barack Obama, in a debate with Republican-nominee Mitt Romney, emphatically said that the sequestration would not happen. Yet, here we sit.

The total for the sequestration cuts is approximately $1.2-trillion over 10-years.  According to the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO), the total of cuts for the current fiscal year under the new amended agreement from the fiscal cliff deal is $85.3-billion… $42.7-billion from defense and $42.7-billion from non-defense.  To put this into some perspective, the overall projected spending (budget) for 2013 is estimated at $3.8-trillion.  The amount of revenue that is projected for the same time period is only $2.9-trillion.  This leaves the country with a debt of $901-billion.  We are talking about $85-billion out of $901-billion.  This is nothing more than a small slice of our debt.  And overall for the total 10-years, it roughly only amounts to a 3% cut.  This is a super tiny sliver of our spending.

BG-sequester-decision-time-chart-2_600

So it’s just a small amount of spending that is being cut.  For those 10-years, how does it stack up piece by piece?  Now this is total for all 10-years combined.  Entitlement spending will roughly be $26.1-trillion.  From that, only $171-billion will be cut.  Non-defense discretionary spending will be $11.3-trillion with $322-billion being cut out of that.  Defense spending will see $492-billion cut from $5.3-trillion.  Net interest will see a $169-billion out of $3.6-trillion.  These numbers have been provided by the Congressional Budget Office.  From these numbers, defense does take the biggest hit at 42.6% of the sequestration cuts.  The net interest takes the smallest at 14.6% and entitlements at 14.8% of the cuts.  Regardless of the percentage of cuts each section is facing, they are still just a small fraction of the overall spending.  In fact, the CBO projects very little difference in our debt with or without the sequester in place.

sequesterSo with the sequestration cuts just around the corner.  Government agencies have begun to take preliminary steps to prepare for them.  This includes notices to workers that might be furloughed to what cuts will come from certain programs.  The heads of these government agencies have called upon Congress and President Obama to come up with a new plan to replace the sequester with other forms of cuts.  President Obama has said he will now veto any legislation that takes away the sequester.  Since the department heads haven’t made any headway with their messages to the politicians, they have now resorted to other tactics… specifically by announcing what they intend to cut which does include some jobs.  The defense department was supposed to deploy the carrier Harry S. Truman and its group to the Persian Gulf, but instead has decided to keep it in port citing the sequestration cuts.   So basically, the defense department is saying that to get to its $42.7-billion in cuts for the year, one of the only ways is to keep a carrier group at home when we have previously committed to keeping two groups in the Persian Gulf because of the situation with Iran.  There are apparently no other places in the department, no wasteful spending at all, that could be cut from its budget so this is what they are going to do.  It’s almost as if they are going to hold Congress hostage until it replaces the sequestration.  Other departments are going to the same lengths to put pressure on Congress, but the defense department has been the most vocal over the cuts it is facing, which, quite frankly, it desperately needs.  Our defense budget is already over-bloated and disproportionate to our own budget and to even the rest of the world.

Conservative columnist George Will stated that Congress should let the sequestration stand, and I wholeheartedly agree with him on that point.  The federal government does have a spending problem.  Though the sequestration cuts are only a small fraction and will hardly make a dent in our spending, it still needs to take place.  The various departments want to whine and spend their time trying to reverse it, but they’ve also had ample time to actually figure out where wasteful spending actually occurs in their departments and eliminate it.  Quite frankly, the cuts needed to be even deeper in order to actually make a sizable dent in our deficit spending.  There was a compromise on raising revenue in the January 1 fiscal cliff deal.  Now the compromise on spending cuts from 2012 needs to stand as well.  We cannot continue down the path we’ve been heading.  Big decisions have to be made… ones that call for increased revenues (and not just income tax increases) and significant across-the-board cuts and elimination of wasteful spending.

LINKS:
US Government Spending
OMG Report on Sequestration

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