Much-anticipated sequester doesn’t impress citizens


On March 1, President Obama was forced to sign a series of automatic budget cuts totaling $85 billion, popularly known as the “sequester.”
The days leading up to March 1 were saturated with political rhetoric centered on the claim that the sequestration will make deep cuts in the budget, causing government layoffs which would jeopardize economic recovery.
However, the truth about these “draconian cuts” is that they are a joke. Although the President and other leadership in D.C. have stated that the sequester will cause a catastrophe for the economy, don’t be fooled; on the contrary, it needs to be even larger if we are to achieve economic growth.
“These cuts are not smart. They are not fair. They will hurt our economy. They will add hundreds of thousands of Americans to the unemployment rolls.”
This statement from the President is an example of the fear mongering emanating from Washington, D.C. concerning the budget “cuts.”
I placed cuts in quotation marks because the sequester doesn’t cut spending.
Rather, it’s a reduction in the rate of increase of spending, which is a typical strategy that politicians do when they say that they will “cut spending.”
Veronique de Rugy, a senior research fellow at the Mercatus Center stated, “According to the CBO (Congressional Budget Office), without sequestration, discretionary spending (military spending, the FBI, highway projects, etc.) would grow from $1.05 trillion to $1.23 trillion between 2013 and 2021. With the sequester, it will instead grow from $1.05 to $1.15 trillion.”
If we are actually serious about paying off the national debt and growing our economy, then the American people should see the sequestration as insufficient.
“These cuts aren’t large enough. Cutting government spending is good for the economy,” says Peter Schiff, President and CEO of Euro Pacific Capital.
The reality is Mr. Schiff is right: there is a plethora of examples throughout modern history that show the success of cutting spending.
For example, during the 1990s, Canada was in a financial mess, so the Canadian government instituted across-the-board budget cuts.
The result? Canada enjoyed years of prosperity in the 1990s as they paid down their debt and were lightly affected by the 2008 financial crisis.
Canada is only one example of how shrinking the overall size of government yields positive results for the economy and financial solvency.
If we are to do the same in the U.S., then don’t look toward this current administration or Congress to get the job done.
The issue with sequestration is not the conventional wisdom of it being harmful to the economy and middle class families, but that it’s not enough to solve our financial woes.
If the President and members of Congress became so scared and angry about an $85 billion reduction in the rate of increase of spending across several years, then imagine what will happen if the United States becomes the next Greece.
If we act and cut spending now, then we will have a chance to preserve this great nation.