From all the reports we read, the sky appears to be falling as we approach the dreaded sequester at the end of the week. For those who’ve been living under a rock, the sequester is $1.2 trillion in automatic, across-the-board reductions in nearly all government operations over the next decade.
That amounts to $109 billion in yearly cuts, about $55 billion of which will come from the Pentagon. This year, given $24 billion already paid by the fiscal cliff agreement, if the President and Congress do not agree, $85 billion will be cut automatically from the Federal budget.
The Pentagon cuts were meant to bring defense-minded Republicans to the negotiating table, but it is the fiscally-minded Republicans in the ascendancy. So we head for the brink again.
These blunt cuts were supposed to be a painful incentive for Congress and the President to come to a deal. However, not in Washington and not this year. We are seeing not brinkmanship, but a resignation to the cut actually being enacted.
Here’s where I differ from the President and lawmakers screaming about the dire consequences of the sequester. I welcome the sequester. There are many good reasons for it. In fact, I have ten of them below. Here they are, in no particular order:
- America has to learn to live within its means. We cannot keep spending trillions beyond our ability. Its that simple – “exceptionalism” will not keep you from going broke and down the tubes.
- It stops politicians from kicking the can down the road…again. Politicians in Washington will do anything to avoid hard economic decisions. The sequester will put a stop to it…for a while at least.
- It forces politicians to make hard decisions. Yes, I mean all those foreign military bases, pork projects, weapons the Pentagon does not need or want. Yep, this is time to trim the fat from the pig.
- It puts a brake on unaffordable defense spending. Yes, I agree the military are doing a great job. Well done. But they do not live outside the confines of the national budget as some would want. We spend far more than any nation in the world on defense. Far, far more. We can cut spending and still be the most powerful nation on earth.
- It enables politicians to see that touching sacred cows is possible. If we can just make it to the sequester and we see the sky does not fall, it will be the first step to getting our financial house in order before we become like Greece or Spain.
- It clears the deck for a serious discussion of entitlements. Once we get past the sequester, the President and Congress will have to talk entitlements before the debt ceiling is raised, again.
- It prepares the way for a rollback of corporate welfare. Yes its true, large corporations suck the teat of the Treasury, as we saw with TARP. The government allowed the oil companies to decide their own taxes and made a deal with the pharmaceutical companies not to negotiate for the largest drug purchases in the world i.e., Medicare. Tighter finances leave less room for corruption.
- It slows the growth of the Federal deficit. This is just math..and yes, I disagree with Paul Krugman who thinks that eternally adding to the national debt is just fine and dandy. It’s not.
- It will bring certainty to the business community. No more wondering..”will we, won’t we”? The government will take a serious non-pandering, non lobby-driven long-term decision for once in their feckless lives. Businesses will have that certainty to work with….at least for a while.
- It will delay and/or prevent another downgrade to the U.S. credit rating. Once we begin to put our financial house in order, it would be harder to see our credit rating go down.
So say welcome to the sequester. It will grace our tortured politics and yes, our finances. And we can stop spending our grandkids inheritances and saddling them with massive debt.
Bring it on.
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