Let the Sequester Stand
Today, President Obama, the nation’s sole proprietor of common sense and balance opined that budget cuts and future budget cuts were harming an economy on the verge of taking off. Oh, I forgot to add, he is the sole owner of “about to improve, take off, and rebound” as well.
The whole problem with his argument is that if our economy is staying afloat only through the graces of government spending, then the economy is in horrible shape and by economy, I mean the private sector. Government produces nothing and in fact takes cash from the private sector. And, anyway, if government spending was the cure for the bad economy, shouldn’t 6 trillion dollars of borrowed money have made this the best economy ever?
So any rational person (if you disagree with me, you then aren’t rational, because two can play at this game) can see that theory that government spending stimulates the private sector to prosperity has been tested and proven false over the first four years of this failed presidency.
Which brings us to the Sequester. Let. It. Happen.
Now, I know, some of my fellow conservatives are going into fits over defense cuts, but the sequester is neither radical or draconian, but as usual, it is more hype and the very least action that this government will take.
I found this explanation of the Sequester at the Bipartisan Policy Center. To be honest, I don’t know if the Bipartisan Policy Center is left or right, but its memorandum actually reflects the facts of what the Sequester is in a succinct way.
The Budget Control Act (BCA) requires a cut of over $1 trillion in spending through a sequester. The Office of Management and Budget (OMB) is given authority to carry out the sequester. We do not yet know OMB’s interpretation of the Act, but the Congressional Budget Office (CBO) assumes that the sequester is intended to make cuts to discretionary appropriations and mandatory spending that add up to $1.2 trillion (less assumed debt service savings) over nine years, beginning in 2013.
• For fiscal years 2014-2021, cuts would be achieved by lowering the original BCA caps on defense (which does not include Overseas Contingency Operations (OCO)) and non-defense discretionary budget authority, and by cancelling budgetary resources for some mandatory spending programs.
o 2013 is dealt with differently. There are no new discretionary caps. Rather, the cuts will be made regardless of Congress’ appropriation levels. (Note: Our interpretation is that this cut will include OCO.) Unless resolved by September, agencies will have to begin their fiscal years with a high level of uncertainty about their funding levels.
• Real level of program cuts is $984 billion. This is because $216 billion of the $1.2 trillion will come from assumed interest savings.
• Cuts are evenly divided between each of the nine sequester years. Therefore, each year, OMB must sequester $109 billion from projected spending.
• Annual cuts are split evenly between the non-exempt portions of defense (function 050) and non-defense spending – an approximate cut of $55 billion to each. Cuts are spread among discretionary and non-exempt mandatory spending. Defense and non-defense discretionary spending will be cut to lowest levels as a percentage of the economy in the modern era.
• Most mandatory spending is exempt from the sequester, including: Social Security, retirement programs, veteran’s benefits, refundable tax credits, Medicaid, the Children’s Health Insurance Program (CHIP), unemployment insurance, food stamps (SNAP), Temporary Assistance for Needy Families (TANF), and a host of other programs (mostly those benefitting individuals with low incomes).
• Medicare is subject to the sequester in the form of provider payment cuts, but those cuts cannot exceed 2 percent.
First, the Sequester doesn’t happen all at once, which is typical of the way in which Washington cuts things. Cuts are spread over 9 years beginning in 2013.
Second, divide $1.2 trillion by 9 and you roughly get $133 billion in cuts. Last year the Federal budget was $3.5 trillion. These cuts are insignificant on a yearly basis.
Third, there’s some Washington magic, and smoke and mirrors here as well. Actual cuts will only be $984 billion over 9 years, as Congress actually counted $216 billion in interest savings as part of the cut. So in other words, over 9 years, there will only be $984 billion in cuts, or roughly $109 billion a year.
Fourth, cuts are distributed between Defense and non-defense spending. So that means the Defense budget will be cut $55 billion a year for 9 years. The same will go for non-defense spending.
Defense spending in FY 2012 was some $650 billion.
Here’s a recent history of Defense and discretionary spending.
In essence, to bring discretionary spending down, Defense will need to be cut. Remember, as recently as 2001, the Defense budget was $306 billion.
Does lowered Defense spending make us less safe? Sure, but I’ll throw this one at you as well. Does a fiscal collapse, turning us into a third world nation make us less safe? It sure does as well. At least we get to manage things with the Sequester.
Finally, I’ll leave you with this thought. If the Sequester is abandoned, do you really thing President Obama will make the hard choice to cut social spending? Furthermore, do you really think the Republicans, the very same Republicans who squandered the Tea Party victory in 2010, will have the courage to make the right decisions and cut spending?
You know the answer to both questions. The Sequester must happen or nothing will happen at all. There are no statesmen left in this nation, only venal politicians.