Tuesday, February 26, 2013

The Sequester

I thought it might be a good idea to do some research on the latest Washington manufactured crisis; the sequester.  For those of you who are not aware of what is happening, and judging by polls and in the street samplings, that includes almost 3 out of 4 Americans, this particular sequester refers to the automatic budget cuts that will kick in this Friday,  March 1st, if Congress does not send an alternate plan to the president before then.  Of course, part of the problem, part of the reason this situation even exists is the American voters lack of participation in the governing process, lack of follow-up to see how our elected officials actually behave/vote, but no lack of cynicism and apathy concerning our democratic processes.  Consequently, when this newest "day of doom" was created in 2012 when Obama and Boehner failed to agree on the Grand Bargain that they had worked on, we all yawned, chalked it up to another example of party politics trunping the good of our country, and, believe it or not, re-elected the vast majority of our Congressmen, those same people for whom we allegedly held a 10% approval rating.

I won't say, we get the governance we deserve, but....

Anyway, with all the talk about the immediate $85 billion in spending cuts, along with the extended 10 year $1.2 trillion in cuts, I thought it best to try to find where, exactly, these cuts were to occur.  Which Americans might actually suffer as a result of these cuts, which were spared, and would it be good for America.  Unfortunately, there is no easy answer.  As stated in the below link which I found as factual as any, "there are several guides, but we have to warn you: it's less like sitting in an easy chair and more like wandering through a dark, unlit dungeon."  Isn't that wonderful!  There do appear to be a few areas that can be winnowed out of the morass that is this sequester, and the federal budget itself, and I will comment on a few of them below.  But first, take a few minutes and click on the link below to read one perspective of this latest attempt by our political parties to "win" without completely ruining the American middle class in particular, and the economy in general.     


For all the gnashing of teeth emanating from the Pentagon, it surprises me that they can't take a $42 cut from their over $600 billion budget.  It is about 2/3 of one percent.  Especially considering that 2013 and 2014 will see a reduction of our involvement in Iraq and Afghanistan.  While it may not be the same perspective, my paycheck was just reduced by over2% when the 2 year social security reduced contribution plan expired on December 31st.  Still, I am bothered to think what percentage of this savings will come from furloughs of hard working middle class Americans as opposed to a hit in the profits of some of our more overpaid defense contractors and/or elimination of unnecessary weapons systems . 

As for all the cuts to domestic programs that help low income citizens, provide for child care, help fund Head Start, etc, its seems that one of our favorite past times when trying to balance the budget is to hammer the "young and powerless", while refusing to even consider means testing to reduce benefits and tax breaks for those who don't require them.  At the end of the day, again, middle class people will bear the brunt of the cuts while asking of the rich only that they make the difficult decision as to which low salaried employees to lay off.  Poor babies.

Clearly, it is easy to discern that I am unhappy with the high percentage of cuts that affect the most disadvantaged among us. Frankly, it is obscene, and completely belies the fantasy that we are a Christian nation.  To add further insult to injury, I found the following history of tax receipts as a percentage of GDP.  In a nutshell, it illustrates how our corporate tax structure, or lack thereof, allows corporations to enjoy the freedoms of America, the profits that they gain from the purchases of goods and services by our everyday citizens, even grants them the status of individuals as ruled by the Supreme Court in the area of political donations, yet excuses them from paying anywhere near the same percentage of taxes that individual Americans pay.  Now, I know that I am fond of saying that you can use statistics to prove virtually anything so we should always be careful to look askance at conclusions that derive solely from one statistic, but this history of tax receipts chart as compared to GDP shows that there was a time when corporations paid a similar aggregate amount of taxes as individuals, in fact paid more so during certain years as detailed by the chart.  The stark reality is that the corporate tax contribution has remained at or below 2.7% since 1980, and, in fact below 2% nineteen of the last 32 years, while individual tax receipts have been over 8% nineteen of those same 32 years.   


The sequester, for all its bad decisions and bull-in-a-china-shop approach to our budget problems, attempts to stem the tide of red ink that has resulted from the two non-funded overseas conflicts in the middle east, tax cuts that benefited the wealthy, a horrible recession that threw millions of Americans off the rolls of taxpayers and onto the rolls of the various assistance programs (a kind of double whammy), and an aging population that reduces those contributing to social security and medicare while requiring more outlays from those two important programs.   Sadly, it does so, not through adult decision making, compromises, and shared sacrifices, but by targeting those least likely to host a $1000 a plate dinner.



  1. Joe,
    The hit that the Pentagon is taking may not sound like a lot percentage-wise (you could say the same thing about the overall national budget) but coming all at once in the latter half of the fiscal year and targeting specific accounts, it gets ugly. The majority of the cuts will occur in the operations and maintenance accounts because a good portion of the rest of the budget is tied up in money on contracts, veteran’s benefits, medical coverage, etc. Thus, training and deployments are significantly impacted; not to mention DoD employees like me. Entire Navy Air Wings will be grounded for months. That will degrade readiness and I imagine retention of pilots. To put it in simpler and more personal terms, I stand to be furloughed for 22 days April through September. This represents about 9% of my annual pay but 20% of my pay for that timeframe. Ouch!
    However, I am weary of the grandstanding and demagoguery; particularly that of the President. He got his tax hikes at the beginning of the year and there were no spending cuts. The out of control spending is what is going to eventually wreck this country and there isn't enough wealth in the hands of the top 1 or 2% to significantly change the trajectory. Besides, I believe that group already pays more than their "fair share." I stand to lose a significant amount of salary this year but if it helps the President face reality I say bring it on.

  2. Bill,

    The fact that the Pentagon budget cuts hit regular Joes like yourself is the problem; why aren't some of those contracts on the chopping block? Why do we still have overseas bases in places like Germany and England? I feel for you and am appalled that our elected officials are using your income to gain political points rather than addressing the issue of why America spends so much money to maintain the military-industrial complex. Spending certainly needs to be curtailed, but when it is, it is money that helps everyday Americans, like yourself, that is cut as opposed to tax cuts for the wealthy, and tax breaks for big businesses that are recording record profits. Capitalism has been taken hostage by those with great wealth and those in government who have been corrupted by the prospect of lining their pockets at the expense of the American people. Unfortunately, while both parties cowtow to big business and big campaign donations, it is the GOP who block every effort to reign in this spiral of more for those with the most. Watch for the budgets that come out in the next week and check out how much is cut from the bottom line for everyday Americans by the GOP proposals. Medicare, Social Security, low income assistance programs, even something as simple as PBS, all will be targeted by the GOP budget axe while big oil subsidies, and big contracts for defense weapons we don't need and will never use will be "off the table".