- Last Updated on Wednesday, 28 November 2012 10:43
- Published on Wednesday, 28 November 2012 10:43
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Congress doesn’t seem to like its own legislation. Back in 2011, Congress enacted the Budget Control Act. It had two key features. First, there was a twelve member body called the Super Committee. This was a bipartisan group from both chambers, half Democrat and half Republican, that would propose a package to reduce the deficit and give it to both Houses for an up or down vote. If it had worked, if there had been a grand bargain, it might have been considered a turning point and a piece of creative and courageous legislation. But, that didn’t happen. The Super Committee, at an impasse along party lines, didn’t write a report. And there was no up or down vote. Now, the poison pill in this bill, the feature that was designed to push the two chambers to compromise, is set to kick in. It’s harsh. The section is effectively an automatic budget axe and is called sequestration. Under the terms of the bill, the first year’s cuts will be about $100 billion split almost evenly between defense and non-defense. According to the implementation schedule it all begins on the second of Jan. 2013.
At the same time, in a bit of timing that makes me wonder how any member of the House or Senate got reelected, a series of tax cuts enacted in the early part of the last decade are set to expire at the end of the year. Millions of people, all at once, will get at big tax increase. This is a massive legislative train wreck, but perhaps, instead of spending so much time trying to undo it all, they should just let it happen.
I know, some would say that’s irresponsible. The effects, it’s been argued, could be devastating and the economy could lurch back into recession. That could happen, but it’s not guaranteed, and some economists think that sending a clear signal that we are actually doing something about our deficit would have a far better, long term effect on our nation’s economy and our standing in the world. That’s a strong argument for Congress and the President to do nothing.
Just consider the situation. The total outstanding national debt is nearly the same as our national Gross Domestic Product. The last time it reached this level we were fighting World War II. At the same time, a third of our annual budget is borrowed. The situation is out of control. During the campaign, Republicans, invoking a scary image, likened our situation to Greece. That wasn’t a bad analogy, but of course, we do have a much larger line of credit than Greece. But, that’s hardly sufficient reason to spend the nation into fiscal oblivion. The consequences of this spending binge, and sorry, both parties deserve an almost equal share of the blame, are staggering. We have already lost the flexibility to meet a large scale crisis. While we could probably come up with the money to meet the extreme requirements of a cataclysmic disaster or a large scale war (perhaps by asking China for the loans), I wouldn’t guarantee it. Some of our credit ratings have been downgraded, and if we were an average borrower, and any bank I know was looking at extending our credit limit, I think they would hand back the application, and say “no thank you.”
That’s why, perhaps letting sequestration, as tough as it is, kick-in might not be such a bad idea. It’s already approved legislation, the President signed it months ago, and the mechanism is already in place. And yes, it’s going to hurt. Some large scale weapons programs might have to be scaled back. Spending across the board for domestic agencies will have to be cut. And while the DOD claims the frontline soldier will be the first to be affected, you can’t, with a straight face, say that there isn’t plenty of overhead in the department, and in the services, that can’t be trimmed first. Besides, in advising profligate countries that have overspent their budgets we have always been free with our advice, that what they needed was a little economic tough love. No bail out and no extension of their credit, just austerity.
What both sides said they wanted by repealing this harsh provision of the Budget Control Act, was relief from its harsh budget cutting provisions. Sadly, the United States is past the point where relief can come in measured easy to swallow portions. If the Congress and the President think they can make the kind of cuts needed, while at same time increasing revenue, using the regular legislative process, then they are disregarding their own track record.
Interestingly enough, the cuts that will have to be made aren’t as draconian as the special interests on either side would have you believe. They are manageable, but will require careful budgeting, redirection of resources, and some tough decisions. The Unites States is at a crossroads. And no, the sequestration isn’t the best answer – it’s arbitrary, and automatic. That’s not the way for a representative democracy to manage its budgets. But right now, it’s the only way we’re going to be able to start dealing with this problem. Over the long term, hopefully, Congress and the President, can work together to make these tough decisions the way they’re supposed to be made. But for now, maybe the best approach is to stick with the sequestration and take our medicine.