The American economy was not broken by sequestration on March 1, but the future of our economy is still uncertain. The long-term spending problems are yet to be addressed.
Sequestration involves across-the-board cuts of more than a trillion dollars in government agency budgets over a decade. The cuts are being split between the defense and domestic discretionary spending budgets.
It’s all part of attempts to get a handle on the growth of the U.S. national debt, which exploded upward when the 2007 recession hit and now stands at more than $16 trillion. The sequestration was agreed to in the Budget Act of 2011, as a last-ditch effort to move toward a balanced budget, to try to force the Democrats and Republicans to adopt a compromise. Nobody really thought sequestration would actually take place.
Sequestration is simply a means of taking money from the administration’s budget by cutting spending; in essence, it is the difference between excessive spending and imposed spending limits. The budget cuts are automatic, although the various departments can decide which of their programs will be reduced or eliminated.
President Obama has now signed the sequester order. Spending cuts to various government agencies and programs will occur between March 1 and Sept. 20, 2013, gradually building up in future years.
The president used this action as a political move to blame the Republicans for the fact that this sequestration has occurred. The president did not want to cut spending without increasing tax revenues.
Some people say the administration’s actions are a political ploy to gain advantage for the mid-term 2014 election for Democratic candidates, by blaming Republicans for the cuts.
Both sides are jockeying for power, of course.
Some of these efforts are very troubling. The president has a new group raising money as part of this effort. His presidential campaign organization in 2008 and 2012, “Organizing for Action,” has just become a 501c3 organization, unbounded by campaign restrictions and soliciting $50,000 from donors and large $500,000 commitments from corporations. An editorial in the New York Times urged Obama to “refuse all corporate contributions and limit donations to a few hundred dollars.” Otherwise, it said, “it will be playing the same sleazy game that its opponents do, made even worse by the assent of the president.”
Sequestration has taken effect because our elected officials have kicked our fiscal problems down the road again, rather than dealing with them as adults. We still need a federal budget, which the president must prepare and Congress must vote on. For government to operate effectively, a budget agreement must be worked out by both political parties before late May.
Some important issues still have to be resolved, starting with the automatic cuts on March 1. The top priority should be to determine which cuts will be least harmful to the economy, and make those cuts first. Second, government’s leaders must ask how cuts will affect jobs and work to minimize job losses. And finally, Congress and President Obama must work together to solve our gridlock issues.
Before the sequestration took place, the administration used a political strategy portraying sequestration as a doomsday scenario with dire consequences for the American public.
Some say that the effects will not be as bad as feared, but no one knows exactly how citizens will be impacted or how the economy will be affected in the long term by the sequester. We do not know how the middle class or poor will be affected, in both direct and indirect ways, due to sequester spending cuts.
Both parties are at fault for the dysfunctional, partisan gridlock. Legislators must work together for the public good. America’s military security is not in jeopardy. It is time for a federal budget, after four years of not having one. Spending cuts should be reviewed carefully on all programs. Sequestration can slow down a vigorous economy, but it doesn’t affect the overall growth. Our financial market is robust and businesses are making profits.
With sequestration, we have taken a giant first step to cut spending. We need tax reform, spending cuts that won’t prevent economic growth and a positive outlook for jobs in the future.
Our federal representatives should not let our government operations shut down, but we need to cut the huge deficit. The national debt is growing. Interest rates will go up. We have made a start cutting government expenses. We need to do more, now.
— Bernard Featherman is a business columnist for the Journal Tribune and former president of the Biddeford-Saco Chamber of Commerce.
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