Sequester 101 – What Is Really Going To Happen?

“Sequester” is the word of the week, but with all of the news coverage about the sequester you have to dig quite a bit to find out what it really means.  Much of the press coverage is about who will be at fault and who started this battle, but before we discuss its origins and “who will be at fault,” what does sequester actually mean?  Greatly simplified, for every dollar our government spends, 65 cents goes to pay for “stuff” and 35 cents pays the interest on our debt.  Sequester will not in any way impact our existing spending obligations or our existing debt, it will only limit our future borrowing so that we can only borrow 33 cents of every dollar instead of 35 cents – that is it.  The net impact of the sequester if left unchecked will be to reduce future spending by about $85B when we are already spending a TRILLION dollars a year more than we have.


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Just to put things into perspective, if the sequester became permanent it would reduce our deficit spending by 2%.  Notice that I said deficit spending and not deficit.  Even with the sequester cuts our deficit will continue to grow by about a trillion dollars a year.  If THIS spending reduction is supposed to have the draconian impacts being bandied about, then the our current elected officials have no real intent on reducing spending EVER.  Sequester is a mere mosquito bite and we need a whole body transfusion.  Just to balance our national budget, Congress and the President need to cut an additional trillion dollars just to get us back to balanced.  Even THAT would do nothing to reduce the national debt.

Of course as always playing things purely for upcoming elections and not for what is in the nation’s best interest, the Obama White House is screaming that the sky is falling and that it is all the end of the world.  Obama planned to visit a ship construction site in eastern Virginia to argue that the cuts will cost jobs and undermine national defense unless the Republicans agree to an alternative debt reduction plan that includes higher tax revenue.  During the trip to Newport News Shipbuilding, Obama will “highlight the devastating impact the sequester will have on jobs and middle class families if congressional Republicans fail to compromise,” the White House schedule said.


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“Unfortunately, in just four days Congress is poised to allow a series of arbitrary, automatic budget cuts to kick in that will slow our economy, eliminate good jobs, and leave a lot of folks who are already pretty thinly stretched scrambling to figure out what to do,” Obama told a bipartisan group of governors at the White House this morning.  (NBC)  Obama has relied increasingly on these public events to make his arguments to the public, pursuing a sort of “outside” strategy meant to rally pressure on lawmakers to strike deals on a range of issues. For instance, Obama will travel to Newport News, Va., on Tuesday to highlight the negative toll the sequester would take on that region’s defense industry.  (NBC)

Now here is the real irony – though he is trying to blame Republicans for the sequester, Obama created and authored the sequester.  According to Pulitzer Prize winning journalist Bob Woodward:

My extensive reporting for my book “The  Price of Politics“  shows that the automatic spending cuts were initiated by  the White  House and were the brainchild of Lew and White House congressional   relations chief Rob Nabors — probably the foremost experts on budget  issues in  the senior ranks of the federal government.

Obama  personally approved of the plan for Lew and Nabors to propose the  sequester to  Senate Majority Leader Harry Reid (D-Nev.). They did so at  2:30 p.m. July 27,  2011, according to interviews with two senior White  House aides who were  directly involved.

Nabors  has told others  that they checked with the president before going to see Reid.  A  mandatory sequester was the only action-forcing mechanism they could  devise.  Nabors has said, “We didn’t actually think it would be that hard  to convince  them” — Reid and the Republicans — to adopt the sequester.  “It really was the  only thing we had. There was not a lot of other  options left on the  table.”  (Washington Post)

President Obama has always been masterful at the public relations game and has often been aided by a blindly loyal press corps, but he is really out doing himself this time.  He is blaming Republicans for a program the President created and which will have negligible impact on controlling government spending.  Obama, who originally campaigned on the concept of “reaching across the aisle” is not even bothering to sit down and talk to the Republicans instead choosing to take his warped message directly to the people in campaign styled speeches.

Republicans for their part have not been much better.  First, they allowed this minor spending cut to be characterized as the “fiscal cliff.”  Twice the sequester and the minor spending cuts it requires has come up for votes and have twice kicked the can down the road.  During this avoidance process, GOP legislators allowed taxes to be increased without demanding any commensurate spending decreases.  It is clear to me that neither party is really serious about reducing the size of government and reducing government spending.

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