Much to the horror of various interest groups, it appears that there will be a “sequester” on March 1.
This means an automatic reduction in spending authority for selected programs (interest payments are exempt, as are most entitlement outlays).
Just about everybody in Washington is frantic about the sequester, which supposedly will mean “savage” and “draconian” budget cuts.
If only. That would be like porn for libertarians.
In reality, the sequester merely means a reduction in the growth of federal spending. Even if we have the sequester, the burden of government spending will still be about $2 trillion higher in 10 years.
The other common argument against the sequester is that it represents an unthinking “meat-ax” approach to the federal budget.
But a former congressional staffer and White House appointee says this is much better than doing nothing.
Here’s some of what Professor Jeff Bergner wrote for today’s Wall Street Journal.
You know the cliché: America’s fiscal condition might be grim, but lawmakers should avoid the “meat ax” of across-the-board spending cuts and instead use the “scalpel” of targeted reductions. …Targeted reductions would be welcome, but the current federal budget didn’t drop from the sky. Every program in the budget—from defense to food stamps, agriculture, Medicare and beyond—is in place for a reason: It has advocates in Congress and a constituency in the country. These advocates won’t sit idly by while their programs are targeted, whether by a scalpel or any other instrument. That is why targeted spending cuts have historically been both rare and small.
Bergner explains that small across-the-board cuts are very reasonable.
The most likely way to achieve significant reductions in spending is by across-the-board cuts. Each reduction of 1% in the $3.6 trillion federal budget would yield roughly $36 billion the first year and would reduce the budget baseline in future years. Even with modest reductions, this is real money. …let’s give up the politically pointless effort to pick and choose among programs, accept the political reality of current allocations, and reduce everything proportionately. No one program would be very much disadvantaged. In many cases, a 1% or 3% reduction would scarcely be noticed. Are we really to believe that a government that spent $2.7 trillion five years ago couldn’t survive a 3% cut that would bring spending to “only” $3.5 trillion today? Every household, company and nonprofit organization across America can do this, as can state and local governments. So could Washington.
And he turns the fairness argument back on critics, explaining that it is a virtue to treat all programs similarly.
Across-the-board federal cuts would have to include all programs—no last-minute reprieves for alternative-energy programs, filmmakers or any other cause. All parties would know that they are being treated equally. Defense programs, food-stamp recipients, retired federal employees, the judiciary, Social-Security recipients, veterans and members of Congress—each would join to make a minor sacrifice. It would be a narrative of civic virtue.
It’s worth noting, however, that the sequester would not treat all programs equally. Defense spending is only about 20 percent of the budget, for instance, 
yet the Pentagon will absorb 50 percent of the savings (though defense spending still increases over the next 10 years).
At the risk of oversimplifying, the sequester basically applies to so-called discretionary spending. So-called mandatory spending accounts for a majority of federal spending, but it is largely exempt, so entitlement reform will still be necessary if we want to address the nation’s long-run fiscal challenges.
To close, Bergner notes that “meat-ax” isn’t the right term to describe very small across-the-board cuts.
Talk of axes versus scalpels is designed to deflect reform. Whatever carefully targeted budget cuts might animate our dreams, the actual world of divided government suggests only one realistic way to achieve real spending reductions. It is not a meat ax. A scalpel that shaves a bit off all programs equally would work just fine.
In other words, the sequester is simply a very modest step in the right direction.
And while we should be radically downsizing the federal government, it’s worth reiterating that modest steps are capable of yielding big results.
Simply restraining the budget so that it grows 2.5 percent annually, for instance, is all that would be needed to balance the budget in 10 years. Not big budget cuts. Not small budget cuts. Just a bit of measly fiscal restraint.
Yet President Obama thinks that’s asking too much and instead wants ever-higher taxes to support an ever-growing government.
Reblogged this on This Got My Attention and commented:
Nobody wants to deal with the government debt and deficit problems. However, it’s an unavoidable problem. It’s time to pay up for decades of delusional Free-Luncher-ism.
To be honest, I would be pretty happy with a budget…
You may be getting something for the government benefit you receive (seen) but are paying out a lot more for the government benefits you are obligated to give others (unseen), especially since politics must survive by evolving to make an art out of hiding the later. Meanwhile, government, as the efficient administrator monopoly of all these zero sum transfers takes its cut, making the whole endeavor a losing sum game. Result: Growth rates that cannot keep up with world average growth. Result: Well,…Decline, what else?
Eventually you become like Greece, or Europe in general. Everyone is simultaneously subsidizer and subsidee on multiple fronts. Nobody is willing to pull back from their subsidy demands, for fear that the others may not follow suit. It is like a room where everyone uses his two hands to squeeze the cojones of two people next to him. Yours are being squeezed too, and it hurts!, but you sure are not going to let go of other people’s genitals. After all this is your only leverage in the situation. So you keep squeezing, ever harder. Everyone screams, everyone hurts but virtually no one lets go (some did and quickly learned it does not pay, so they quickly went back to squeezing). But eventually, and soon, reality takes over. Reproduction stops and the race fades away. That is the path western world voter-lemmings are on. Unable to keep up with average world growth, their economies, cultures, states, dreams of mandatory collectivism, are all submerging at a three to four percent annual rate; the difference between their growth rate and average world growth rate. They are becoming less relevant by the day, but they are in denial. That is the reality that is taking over.
Slowing the growth of government could be the push that tumbles us into the Greatest Depression ever.
Did you say you served in the military? Whose military?
Ed, I hope your statement is sarcasm. How could modestly slowing federal government growth push the US economy into a Depression? News flash – not slowing the growth of government is likely to cause the fall of our entire government and economy. Unless you think we can just continue to print and borrow money indefinitely! We cannot even stop deficits, let alone pay off our debts.
First, we don’t have a depression because of over-spending — we have deficits because we have a depression.
Second, but for government layoffs of teachers (which hammers our ability to compete in industry and internationally), cops and firefighters, we’d have at least 300,000 more jobs now, and probably closer to a million. Government cutbacks already have severely hurt our economic situation and added millions to the unemployment roles.
There is no economic theory to support a claim that cutting government now will do anything other than push us further into recession.
The meat-axe cuts proposed will also damage national security — layoffs of contractors in defense and defense industries have already begun, dangerously delaying and perhaps killing many important security projects.
We cannot stop deficits by killing off taxpayers, that’s for sure. We need more people with jobs, and more people paying taxes in order to reduce deficits — and frankly, it doesn’t matter whether government spending starts that process.
But we know that private spending won’t do anything. Private employers are sitting on a pool of $2 trillion to $4 trillion in cash that would very quickly solve our recession and put the federal budget back on track to kill off the deficits, if private business would just spend it. Alas, no one in the private sector is prepared to spend unless there is demand, and unless there is some cash from job-holders in the middle class and poor, there is no demand.
Yeah, I was being sarcastic about the completely unrealistic ideas that cutting government spending now is a good thing. It’s sorta like getting all the “bad blood” out of George Washington so he could heal up.
I’d wager most people who think our problem is too much spending don’t know the story of George Washington’s death, either — teacher cutbacks, you know.
The basics of economics include the laws of supply and demand. Supply doesn’t work without it. But then, those econ teachers had to go, right?
Mike, we’ve got a budget. In fact, now we’re operating under a budget law, not just a budget resolution. See P.L. 112-25.
Economists all agree it’s a disaster.
Good government would help — but that costs money and requires government spending.
I just don’t understand why governments don’t stimulate more. I mean, every year, every month, every day, the choice is either “stimulate” or “don’t stimulate”. Stimulate would get the perpetual motion machine going, yet time and again, they all get it wrong. They don’t stimulate, that is why prosperity is so scarce in the world. I mean, time and again they get the binary choice wrong. How can this be so suicidally prevalent?
For example, to show you how deadlocked people are,
I’ve been going around companies proposing them the logical sensible thing. I say “stimulate me, and I’ll buy your product”. So I say, give me one thousand dollars, twenty thousand dollars, whatever their product costs, and I promise to use the entire sum to buy their products exclusively. I’m willing to sign a contract with severe penalties assuring them I’ll do so. Yet, nobody does. What is wrong with these people? Don’t they understand their basic interests? They give me money, i buy their product, business flourishes. I mean, after all they would be building their corporate empires on my back, the common man always gets the short end of the stick, and they still won’t do it. When I had a shop and business was slow, I’d call to the door the homeless people loitering outside and propose to them: “I’ll give each one of you one hundred bucks so long as you spend it in my shop”. People would flock, business galore! How come we can’t just take this simple step as a society?