Out of Washington comes the news that the expenses of our federal government will be reduced by $85 billion this year (its accounting year which ends on September 30, 2013, and therefore has about seven months to go). No one likes the legislation that forces these reductions even though most people agree that we MUST REDUCE GOVERNMENT SPENDING. What goes here? Lets look at the facts.
If They Are Not Permanent Reductions, What Good Are They?
The cuts have been labeled a “sequester” which implies “to set apart” or “to separate”, but not “to eliminate”. If these cuts are not permanent reductions in what our government will otherwise spend, what good are they? They become merely an empty promise: we will not spend the amounts today, but we may spend them tomorrow. Picture an alcoholic saying “I usually have 10 drinks a day, but tomorrow I’ll have only 9. Hooray, I am cured! And by the way, the day after tomorrow I may have 12 drinks to make up for the one I will miss tomorrow”.
The $85 billion to be cut from government expenses amounts to only 2.4% of what our government will spend this year, and only 9.1% of its projected loss.
Doesn’t Make Much Of A Dent
The cuts amount to $85 billion over the next seven months. Sounds like a lot of money, and indeed it is. But they must be judged in the context of ALL the monies our federal government will spend this year, which are currently budgeted at $3.6 trillion. And the budgeted loss for the period is $930 billion before the cuts. The $85 billion to be cut from government expenses amounts to only 2.4% of what our government will spend this year, and only 9.1% of its projected loss. Doesn’t make much of a dent in the problem does it?
Meat Ax Vs Scalpel Approach
The cuts are coming from a “meat ax” approach to the problem rather than a “scalpel” approach. On an overall basis, our federal government spends $3.6 trillion a year. This, incidentally, amounts to $11,000 for EVERY man, woman and child in our country, and the government spends this amount EVERY year! This spending currently falls into three maj0r categories: the largest is the mandatory (mostly “entitlement”) spending, which accounts for approximately $2.1 trillion a year; the next largest is defense spending, which currently amounts to about $700 billion a year; and finally there is other domestic spending, which is about $600 billion a year. And, of course, we must also pay interest on the federal debt we have accumulated over the years. Looking at these sequester cuts by category, the entitlements budget will be cut $16.3 billion (or 0.8%, which is less than 1%); the defense budget will be cut $42.6 billion (6.1%); and other domestic spending will be cut $26.4 billion (4.4%). The individual line item expenses that were cut were done with very little, if any, analysis of the impacts the cuts would cause. This approach hardly inspires the trust and confidence we should have in our elected officials.
The wrong thing, done the wrong way, at the wrong time.
Sometimes the resolution of a difficult issue (like these sequester cuts), that leaves all the parties somewhat unhappy, is a good resolution. Not so here. Each of the parties (political and otherwise) is VERY UNHAPPY. The sequester cuts come way too late (they should have been worked out throughout 2012 in a very deliberative and thoughtful way). They are way too little (they only reduce out-of-control federal spending by 2.4%, and will make less than a 10% reduction in the huge loss projected for the year). And they are way too sloppy (they fail to target federal waste and inefficiency, and hardly make a dent in entitlements, which are without any doubt our really big problem). The wrong thing, done the wrong way, at the wrong time.
Why? It comes down to a very dirty word. The word is “politics”. I’ll have more to say about that later…Bill O’Neill
Tagged: Federal Spending
I take from your post that you do not support “entitlements”. Is it your view that the government stop long term health care or welfare services?
I heard on the Daily Show that the US Gov outspends all of our competitors on military spending combined. Why not support our citizens in need, versus foreigners?
The problem is that our federal government has promised more “entitlements” than we can ever afford to pay (unless we destroy the purchasing power of our currency with hyper inflation, which improverishes all of us). But some “entitlement” programs are a necessity to provide for those who CANNOT provide for themselves. Thus, we must cut back those “entitlements” which are NOT a necessity.
We do outspend other nations on defense. We do it because our leaders feel we must be the “big brother” to the world, “our brother’s keeper” in effect. This is wrong. Our military must be able to defend our nation, but need not, and should not, be required to impose our view of what a government should be on other nations.