I woke up on Saturday morning and I was fairly surprised. I had assumed that the world was coming to an end since the Republican House and the Democratic Senate and President couldn’t agree on a long term plan for deficit reduction, the automatic spending cut provision of the 2011 Budget Control Act kicked in and 1.2 trillion in spending cuts over nine years were automatically mandated, including an 85 BILLION DOLLAR cut this year, spread equally between defense spending and domestic spending. Since the domestic spending cuts can’t include Medicaid or Social Security, they will be compressed into fewer areas of spending.
The media has rightly been critical of both parties for not finding a way to get spending under control and there have been national news (like here) and local news (and here) stories highlighting the pain of the arbitrary budget cuts on the lives of ordinary Americans. Furloughs for government workers, child care and flu shot cutbacks, and even delays of deploying aircraft carriers to the Persian Gulf were some of the threats outlined the president in this speech. Once the cuts went into place, the president switched his message from one of impending crisis to noting that it’s not an apocalyptical event even though it will hurt and is dumb.
What is rarely mentioned and when mentioned only in a whisper was that the 85 BILLION dollars in cuts have to be made between now and October. They aren’t being made tomorrow. Also not mentioned is that the government is on par to spend 3,800 BILLION DOLLARS this year and will run a deficit of 900 BILLION DOLLARS. The ‘fiscal cliff’ deal supposedly raised 600 BILLION DOLLARS in revenue, but it really raised 60 BILLION DOLLARS a year for ten years, or only 15% of the budget deficit. Even this sequestration and its ‘harsh’ cuts leave a budget deficit of over 800 BILLION DOLLARS for this year.
These ‘deep’ budget cuts account for 2.4% of total spending. I’m sure that some programs (especially the ones that have overspent in the early part of the fiscal year) and their constituents will suffer, but when the social security rate cut expired for me in January, anyone paying into Social Security had a de facto 2% decrease in revenue and have managed to get by so I see no reason why the government can’t also so without 2.4% or so of its revenue.
Politicians of all stripes are playing the blame game and even Mitt Romney has resurfaced to take a swipe at the president. Of all the politicians trying to scare the public into demanding an end to the sequestration cuts, I found Homeland Security Secretary Janet Napolitano’s comments to be most surreal. Napolitano’s department made the decision to release ‘low-risk’ illegal immigrant detainees as a way to save money before the sequestered cuts take effect. The news was leaked to the media and Napolitano said she was surprised to learn about it. She also said that while ‘We are always going to put safety first…the number of Border Patrol hours that will need to be reduced equates to the equivalent of 5,000 Border Patrol agents… We deal with a lot of bad actors… the large narco traffickers, human smugglers…and we will have fewer agents to do that”. In a country where at least ELEVEN MILLION people are here illegally or are undocumented or are without status or are (insert preferred buzzword), the Department of Homeland Security is saying they won’t have the resources to perform their duties without their extra money. If one in every thirty people in this country aren’t here legally I’m not sure why this department is getting any funding at all and I certainly don’t have any confidence in their being able to identify the ‘bad actors’ from among these ELEVEN MILLION people, most of whom are just looking for a better life but if you don’t even know who they are who can how can you tell who is a bad actor and who isn’t.
At this particular moment in the nation’s history roughly half the people are getting from the government and roughly half are giving to the government. This makes it political suicide for conservatives to raise taxes by more than the small amount they already have in letting prior tax cuts expire or liberals to cut the basic social welfare programs that is the key to their support. I’ve yet to have it explained how the government spending 815 BILLION DOLLARS that it doesn’t have will cause the loss of 750,000 jobs and lower economic growth by a third (See this report) while spending 900 BILLION DOLLARS that the government doesn’t have will keep the economy humming along. 85 BILLION DOLLARS divided by 750,000 jobs works out to be $113,333/job. If we just gave 750,000 people $70,000 apiece to do nothing we could save all 750,000 jobs and save the government over 32 BILLION DOLLARS and even more if you count the taxes that would be coming back to the government. I haven’t done the math but if we gave away $70,000 to enough people, the country could not only wipe out the deficit with the increased tax revenue, but actually create a budget surplus and lower the tax rate!!
All seriousness aside, it seems as if the current sequestration has taken on a life of its own and will not be ended from any pressure on Washington from the American people. But that doesn’t mean that there is no way to end the sequestration. I noticed that when Secretary of State John Kerry went to Egypt this past week he handed 250 MILLION DOLLARS to Egyptian President Morsi with the promise of another 750 MILLION if the country demonstrates its credentials as a democratic nation. Another TWO BILLION DOLLARS is heading to Pakistan. The United States sends 50 BILLION DOLLARS a year overseas in foreign aid. These funds have been approved by Republican and Democrat Congresses and Republican and Democrat Presidents. Normally I’d say this is a small amount but this is money that as a country we are borrowing to send overseas. I think the government must really like all these foreign countries to be borrowing BILLIONS of dollars to send to them. The funds are not part of the sequestration, but in my opinion they should be the first funds sequestered. If the Pakistans, Libyas, Egypts, and Israels of the world lost their ‘government allowance’, they might be able to pressure the US government into the sound fiscal policies the American people can’t.