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Everything You Didn't Want to Know About the Sequester

February 27th, 2013 by 
PK

Have you heard?  The day of reckoning is soon upon us - on March 1, 2013, the 2013 Sequestration goes into effect, and the Executive Branch must direct $85 Billion in cuts in the current year before October 1.  The Sequester was supposed to be the impetus to get the two parties to agree to some more targeted cuts, but as it stands, half of the cuts will come from discretionary programs, while the other half will come out of defense.

Woe is us, am I right?  Here's a number of reasons not to care if the Sequester happens.

'Tis but a Scratch

It's been said in other quarters, but I'll also say it here: $85 Billion is a large number, but when compared to the Government's projected spending of $3.553 Trillion (included interest on our debt), it's merely a flesh wound - a mere 2.4%.  Even when compared to just the discretionary part of outlays, $1.213 Trillion, it's 7%.  That's assuming there will be a full $85 million in cuts... the CBO only projects $44 Billion.

Overall Government Spending Will Still Increase

With apologies to my co-writer Cameron, let's torture an analogy.

Pretend that you weigh 353.8 pounds.  At the end of 2013, you plan on weighing 359.7 pounds.  Suddenly, you decide you only want to weigh 355.3 pounds at the end of 2013.

Did you lose weight?

The answer to that question is: no, you didn't lose weight.  And that is exactly the situation we find ourselves in with the Sequester - the Government isn't actually cutting spending, just like you didn't lose weight.  (Oh, and as recently as 2007 you weighed 272.87 pounds.)

In the CBO projections, in no year will year over year spending decrease.  Less ambitious raises in future spending aren't cuts.

Nothing Necessary Needs to be Cut

13% cuts in Military spending may seem steep, but they are well in line with other cuts to military spending after wars were over (or on the decline).  Why that should change, or even have a giant asterisk on it this time is beyond me.  And, yes, military spending will be higher than it is today within a decade - even if no new laws are passed.

On the Domestic spending side?  These are budgets that have swelled by more than $42.5 Billion (sorry, $22 Billion) over the last few years, so it's absurd to argue that these cuts are 'draconian'.

Now, that doesn't mean there won't be disruptions.  Government begets more Government, so the most likely scenario when you put Government in charge of cutting itself?  Government will cut the things people use the most or want (or, in the case of the TSA, have been forced to use).  This isn't a new invention of the DQYDJ Opinion Page, oh no - it's known as either the Fireman First principle, or Washington Monument Syndrome.  Government will make no cuts to things that should be cut, but instead try to maximize voter pain by cutting necessary services and visible landmarks - things that people will notice.

Think I'm making it up?  Here in California, we went through multiple park closures in the last five years.  Come to find out, California Parks & Recreation was sitting on a surplus.  That's right - they cut parks even before spending the budget they had!  Nobody ever said Government wasn't sneaky, right?

Expect the Sequester to go the same way, until someone starts poking around and makes one of the parties sweat.

We've Already Enacted Multiple Spending Bills

Since the Sequester became a possibility in 2011, we've enacted multiple spending bills which have raised baseline spending.  The most recent example was the $50 Billion Sandy Relief Bill (remember: the Sequester is $44 Billion in 2013), a bill which wasn't limited to just Hurricane Sandy relief spending.

Language on the Revenue Side Isn't as Apocalyptic

Reading coverage of the Sequester is sort of like reading a competition to use the most extreme imagery - the cuts are 'apocalyptic', The Government is using a 'cleaver', they're 'draconian', they'll 'end government as we know it', they're 'the end of our fragile recovery'.  While some of that might be posturing to prepare to blame the other side if side effects of the recent tax increases do cause economic slowdown, I don't doubt that some people actually believe it.

If that's the case, why was $600 billion in new income taxes over 10 years not a big deal?  How about an $120 Billion (in 2013 alone!) increase in the Payroll tax?  No big deal, right? Or the end of life as we know it?

No One Else Cares

The ultimate reason not to care?  Despite the histrionics of Washington, D.C. and some members of the media, most people don't care.  How do I know?  Here's a graph of search trends for three recent "Sky is Falling" crises in D.C.: the Fiscal Cliff, the Debt Ceiling and the Sequester:

The Government has cried wolf too many times.

For the best example of the genre, I'll let Jon Stewart take it away.  It's just not a huge deal.

Sleep Tight!

So, come March 1 if nothing has changed?  Don't panic, friends.  You'll be okay - and don't worry, your Government will continue to spend more than it did the year before.

Don't Quit Your Day Job...

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