In Short Supply

With some three days now behind us with what was apparently the financial Sword of Damocles hanging over our heads may not have been so dangerous. Or is it perhaps not the Cicero reference that we should use, but instead that of Edgar Allen Poe's “The Pit and the Pendulum”? Whatever the literary metaphor used however, many of our national leaders and their media minions would still like us to believe that we are on the very brink of financial disaster. What, again?

After all, we haven't had visions of this kind of Doom and Gloom for the nation since … the fiscal cliff extension of January. No wait, it must have been the last time that government negotiated its last continuing resolution on the national budget. Or was it the time we raised the debt ceiling the time before that?

No I remember now, it was all the way back in August of 2011 when the President and his staff in the White House proposed a financial Doomsday Device last discussed while coming out of financial malaise of Jimmy Carter's Administration (often also considered a Doomsday Device). For those who don't want to do their research, this was something from what is remembered as the “Gramm-Rudman Act” of 1985 proposed during the Reagan Administration as an emergency control for a government deficit considered to be out of control when it reached (wait for it) $1.8 trillion. This court of last cut was known as: SEQUESTRATION.

The concept was a simple enough one. If Congress and the President couldn't agree on federal budgets that began to get the national debt under control, automatic and across the board cuts to that budget would be made to do what Republicans and Democrats could apparently not do for themselves. While the federal government never actually used Sequestration at the time (nor did they actually reign in deficit spending for that matter), the general growth and improvement in the national economy caused the issue to drop off of the radar screen of the American public in the 80's.

Fast forward twenty-six years to the middle of the next great recession (or perhaps an even greater one, depending on the expert). The economy is once again in the doldrums and the national debt has been growing well in excess of $1 trillion per year (almost in fact, increasing at the level annually as the total National Debt during Reagan's days). Democrats and Republicans, caught up in the never-ending election cycle and their belief that victory lies in counting coup on political opponents, cannot seem to find common ground on the common good of the nation. (I refuse to use the word Compromise, since it's now equated to Capitulation.) So someone in the White House with some knowledge of history dug out the concept of Sequestration, the President embraced it, and Congress quickly passed it on a bi-partisan basis. After all, its implementation would not happen until after the next election, and who among them ever gives a damn about things so far in the future.

Fast forward again to today, and the 'Chicken Littles' in DC run the streets of the city (or hold press conferences in front of first responders and defense workers) telling us that either the sky is falling or that we shouldn't be afraid of Armageddon just yet (usually the person who previously tried to scare the crap out of us). Because of enthusiastic bi-partisan embracing of something that they proposed eighteen months ago and a refusal to do anything about triggering it since, we could yet see these chicken come home to roost (that for you Rev Jeremiah Wright). They tell us now that while not tomorrow, someday soon we're going to find some things in short supply. They're right of course, but not in the way they think. Here in fact is a partial list of such items that we're seeing already (in no specific order): common sense, undistorted facts, unbiased analysis, and of course ... potential solutions.

There are also a number of things that haven't been in short supply during the same period: bombastic discourse, meaningless rhetoric, shameless posturing, and government money. Sequestration will in fact do little more than reduce the rate of baseline budget increases due to occur. The government budget process automatically increases each year as part of their arcane calculations by averages of from four to six percent. Sequestration merely reduce those increases by $84 billion, or some 2.4 percent. Now don't get me wrong, there will be some hardships ahead, as our fearful leaders purposefully select targets that might do the most damage to their political opponents. The send workers packing, cut essential strategic initiatives, and even to some extent endanger citizens in their quest to make political points. They'll even let prisoners out of jail illegally in the hopes of currying political favor with their supervisors and scaring us all half to death.

Of course the rest of us have learned to do with two percent less since the temporary tax holidays of January for FICA went away, but we certainly can't expect those chosen to lead the country to be able to make the same kinds of tough decisions like canceling travel plans we've made and can no longer afford. We've also learned to do with less since gas prices have more than doubled in the last four years, groceries have gone up. (Can you say ethanol?) And in spite of what we're being told, inflation of our currency in general has meant that we increasingly have to do more with less.

In fact, You will find me instead celebrating the process of Sequestration, since it may serve as the only attempt at the reduction of federal spending that occurs in 2013. It's obvious that the feds can't get their own house in order, and the Law of Unintended Consequences of Sequestration will be usded to do so if it must.  All of this of course, means that one further thing is going to be in short supply for the government in the days ahead, my sympathy.

Happy Sequestration Day!

As I continue to mull over the ramifications of Sequestration this morning (short term and long term), I have been reminded of a number of experiences in my own life.  Sequestration after all, while orginally suggested by a member of the President's staff, was in the end embraced not only by the Commander-in-Chief, but on a bi-partisan basis in both House of Congress before being signed into law.  In other words, this was a choice made eighteen months ago by a majority of our national legislature and our Chief Executive.

This and a discussion of school discipline on 1370 WSPD with Fred LeFebvre this morning, led me in turn to one of my favorite stories from High School Days:

In dealing with an unruly student one day, Father Quinn gave the young man a choice as to his punishment.  He could hold up a sheet of paper in each hand for the rest of class, or take some swats with the belt.  The student in question, thinking himself wise, chose the paper option; and stood in front of class with his arms fully entended for a few minutes before the pain of such a position set in.  

Noticing his discomfort, Father Quinn once again offered the choice, while fingering the 1" belt at his waist.  The student dropped his hands, Father Quinn readjusted his belt, and moved to his briefcase on the desk.  He then removed the 6" belt used to cinch up his Carmelite robe and gave the student in question a lesson in taking responsibility for his choices that I'm sure he still remembers to this very day.  I know that I do. 

So as begin my personal celebration of Sequestion Day, I would like to remind those in our national government.  This was a choice that you made!

Celebrate Sequestration Day!

For those of you who haven't been paying much attention to the news for the last couple of weeks (you lucky bastards), this Friday is Sequestration Day.  Now for those of you who have additionally failed in your obligations to have read the previous posting on this subject in JBS (go ahead, I'll wait here), the Sequestration of 2013 is a series of government spending reductions suggested by the White House, passed in a bi-partisan effort by both Houses of Congress, and mandated to occur by virtue of the 'Budget Control Act of 2011'.  If Congress couldn't come to an agreement on some form of budget reform between August of 2011 when it was signed into law and March 1st of 2013 (after a 'kick the can' extension that moved it from January 1, 2013) Sequestration automatically happened.

In typical recent government fashion, the law was passed to trade spending now for savings later; in this case getting a debt ceiling increase of $400 billion back then (with an option for $500 more that was used) for $1.2 trillion in spending reductions over ten years.  If an agreement on those reductions wasn't reached, a form of them would kick in automatically instead; and since Congress seldom has the courage to cut money from any program, these cuts would be made based on the difference between the annual portion of the $1.2 trillion and whatever across the board cuts Congress could come up with.  (Hell, the Senate hasn't even had the testicular fortitude to pass a budget in four years and the President has been late in delivering budgets four out of the last five years. )  They would affect almost everything except entitlement programs like Medicare, Medicaid, and Social Security.  

Hidden in the fine print of all such government language however, is that any such action would be  based on the 'Base Line Budget' process that Congress uses where the national checkbook is concerned.  Now for those who don't understand this concept of accounting, practices that would be considered illegal if practiced by anyone other than the government; it means that every budget program funded by the government is assumed to get bigger each year.  This means that programs will normally see the equivalent of cost of living increases of between 4% and 6%, assuming that their prior year's budget is spent.  In this year's case, because the date of Sequestration was moved back to March 1st, the $120 billion of projected reductions that was originally required would now in fact consist ofof a mere $84 billion ... approximately 2.4% of the projected $3.8 trillion 2013 federal budget.  (I say projected, because without both Houses passing a budget that's signed into law for the last four years, actual budget numbers get rather fuzzy.)  What that in turn means is that the amount of spending that Sequestration will reduce is smaller than the budget increases already built-in under the 'Baseline Budget' principle.  In other words, in spite of the process of Sequestration, the government will still spend more this year than it did last year.

All of the Doom and Gloom coming out of the national bully pulpit that we've been hearing about the last week or so about how these cuts will undoubtedly bring about a fiscal Armeggedon in this country are really nothing more than someone from our government telling us that these agencies must 'suffer' with only slightly more than their funding for 2012.  Their threats of dire consequences are in fact only being made in order to scare us into paying even more taxes than Congress agreed to just a month ago.  So what are we going to do about it?

Well I don't know about you, but I'm going to celebrate Sequestration!  Sequestration may be the only government 'reductions' in spending that we are likely to see this year from the bi-partisan efforts the White House and Congressional behavior that has become far more like that of a crack addict than of a responsible national government.  It appears that we can no longer count on either major political party to do the right thing, but only instead to produce lies and excuses about their own failures.  This is not because they don't know what the right thing is, but because the haven't the backbone to offend any of those special interest groups feeding at the public trough.  After all, with today's endless election cycle, if they aren't looking for campaign contributions for a re-election bid, they're looking for at least the vote of benefiting members of a parasitic constituency.  

Just this once, it appears that they may have done the right thing (probably by mistake) and they don't know how to dig out of the hole that they've created.  While the Sequestration cuts are barely a token, they still represent more than either party has done to change the horrible path that this nation is on in the last couple of decades.
 
In fact, I recommend that we all go out and celebrate; and that we do so as publicly as possible!  Those currently out there on the stump have consistently lied to us not only about the budget, but about the dreaded process of Sequestration that they themselves visited upon us; and for no better reason than to keep us frightened and as they see it, easier to control.  Countering their fear mongering with enthusiasm for what they've tried to make a see as disaster might put them back on their heels.  Celebrating what they think we should be terrified of could make us seem less predictable in their minds.  Acting in a way that passes their understanding might shake recent assumptions by those in Washington that their skills in steering the herd that they believe us to be are anything but complete.  If nothing else, we may get a chance to enjoy their temporary discomfiture and give them pause before trying to create their next faux panic in yet another attempt to manipulate us in the next budget debate.

Yes, I know that it's possible that there might actually be negative consequences to Sequestration; though I suspect that if there are, they will be at our leaders' purposeful doing.  Even if some hard lessons come out of these manipulations however, we should take it as our just deserts for allowing the bi-partisan fiscal impropriety that's been committed.  Times are tough out there financially, and and it's far past time that everyone (including our fearless leaders in Washington) recognized that it's time to learn to do with less in order to survive.  

So while it might be a couple of days early in doing so, I would like to wish each and every one of you:

Happy Sequestration Day!