Feb 21 2013

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The Conundrum of the Sequester

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Don't Let This Happen

Don’t Let This Happen

As the clock ticks down, the debate ramps up on the impact of the looming March 1st sequester.

In a rare instance, both sides of the argument are right, but that correctness ultimately does not win the policy debate.

The GOP is right to scoff at the general notion that $85 billion in cuts – out of a $3.1 trillion budget – represents some form of draconian destruction to the public good.

The sequester is equal to a little less than 3 percent of Federal spending on an annualized basis. It represents ten days of federal spending out fo 365.  Indeed, if you were to apply the sequester math to a family earning $50,000 a year, the cut would be $4.11 per day – or a little less than one blended Starbuck’s coffee.

But by virtue of how the sequester was designed – across-the-board cuts without any sense of priority, limited to defense and discretionary spending (leaving entitlements untouched), and with the additional, onerous requirement that the cuts occur in an accelerated time frame (seven months for a cut that was supposed to be spread out over 12 months) – the President and others are also correct that the sequester is going to have a serious adverse impacts; for government services, national defense and potentially economic growth.

The most popular statistic is that 800,000 civilian defense workers will be furloughed one day per week for the next 22 weeks – the equivalent of a 20 percent pay cut. That will impact jobs and the economy everywhere from Pearl Harbor to Norfolk and everywhere in between.

Defense Comptroller Robert F. Hale was sobering when he told reporters Wednesday that $1.1 billion in pay cuts would come from paychecks in Washington, DC, Maryland and Virginia. And that is just DoD cuts

And this kind of action will necessarily be replicated throughout the federal government until September.  It will impact everything from airport screening, and food inspection to FBI law enforcement activities and access to national monuments and parks.

Worse, there will be the virus-like impacts that will bleed into the general economy. Sequestration  will almost certainly have an adverse impact on local retail and hospitality industries around those government/defense clusters, retarding economic growth and increasing business uncertainty.

It is all so very unnecessary.

The sequester is the “bad penny” that resulted from the failed efforts by Congress and the President to resolve the debt ceiling in 2011.

As politics is the art of the possible  – and given that fundamental agreement between House conservatives and the progressive President was impossible – the government consciously kicked the can down the road in a way that both sides believed the other could never accept. There was a sense of comfort as well that in between, there would be a national election and the American people would restore a sense of purpose and direction to the nation before the sequestration threshold was ever breached.

But in 2012, the American people decided not to decide, returning the same players to the same jobs, but with fewer votes.

The sequester, which was supposed to be an unpalitable threat, thusly became real  just as it remained politically unsolvable.

The President wants fresh tax increases and spending cuts to replace the sequester. The GOP, having ceded the tax issue in January, considers the matter closed and wants to focus instead on “smart” budget cuts that reduce spending without draconian impact. Neither side is willing to give ground in advance of the sequester, sure that public opinion will be on its side once the cuts take effect.

Given gridlock, allow me to propose a modest way through.

Congress must approve a Continuing Resolution (CR) to fund the government through September 30th, the end of the fiscal year, by the end of March.

Republicans in the House should approve a plan that incorporates the sequester’s lower number, but that provides the President and Executive Branch with authority to prioritize the cuts so that critical services and military readiness are not impacted.

In addition, the President should be provided with authority to make common-sense spending reforms in entitlement programs between now and the end of the fiscal year. This would share the burden of spending restraint for all federal accounts, opening the door to genuine reform and  provide a down-payment on larger, structural changes that will be necessary in entitlement spending to bring the budget into balance.

It would also be a credible counter-point to the President, for whom every problem can only be solved with tax increases. The burden of blame for the unusual financial hardship thrust upon federal workers and DoD by the sequester will  move to the President, who now will have effective authority to mitigate the across-the board spending cut impacts, if only he will use it.

Until then: tick-tock, tick-tock.





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