Federal Budget SEQUESTRATION
Deconstructing Sequestration by Michael Drohan In the February issue, my article addressed the question of the so-called fiscal cliff that Congress built for itself to fall over. This eventuality was avoided by a last ditch effort to cobble together an agreement on letting taxes rise by 2% on individuals earning $400,000 or more and families earning $450,000 or more. Any decisions on spending reduction were suspended for two months, after which there would be automatic cuts across the table on all discretionary spending of the government, that is, on spending that is not part of entitlement programs amounting to $840 billion over ten years. An additional spending cut of $1.5 trillion was to be identified by a super committee of Congress and would include both discretionary and entitlement programs. Cumulatively, these automatic cuts, which are supposed to kick in by March 1, 2013, if Congress does not come to an agreement before that date, constitute what is called sequestration. Fallout from Possible Sequestration It is calculated that the automatic cuts envisaged from sequestration amount to a cut of 5.1% in all
programs from WIC, Defense, Parks and Recreation, Agriculture and so on. Specifically, for WIC, as a non-exempt nondefense discretionary program, it would entail a cut of 600,000 participants from the program nationwide. There is no area of government programs that would not be adversely affected by such measures. As I pointed out last month, the state of the economy in which these measures are on the verge of being implemented is anything but healthy. Unemployment is still at an unacceptable high level and has been since 2008. Economic growth is tepid to say the least and for the last quarter for which we have figures (4th quarter of 2012) the Gross Domestic Product (GDP) contracted. Under such conditions, implementing government spending reductions is literally economic suicide. Such policies have been implemented in the last few years by many European countries such as Ireland, Greece, Britain and Spain with disastrous results. These so-called austerity programs have especially exacerbated the unemployment situation in those countries and brought their economies to the point of collapse. How is it, then, that in
the face of economic facts readily available for all who have eyes to see that the U.S. Congress or certain elements within Congress persist in pursuing suicidal economic policies? It would seem to be driven by certain ideological convictions which are impervious to facts. The first conviction is that the national debt and the government deficit are the most serious economic problems that face the country at this moment. Related to this is the second conviction that government is far too big and that the Democratic Party is hell bent on expanding government. The third strand of conviction is that government spending takes away resources that could be better spent and used by the private sector. There is a problem of sincerity with these allegations of fiscal irresponsibility leveled at the Obama administration at this moment. In recent decades, the really sharp increases in the national debt of the U.S. were built up during Republican administrations, specifically during the presidency of Ronald Reagan and George W. Bush. During their administrations they increased spending enormously through
defense expenditures most notably and tax reductions especially for the wealthy. While this was in progress there was no outcry of fiscal irresponsibility by Republican lawmakers. George W. Bush bequeathed to Obama an economy in the midst of the worst recession since the Great Depression with unemployment at a level that had not been seen since the 1930s. Such a situation calls for vast stimulus and increase in government programs to put people to work and restore demand in the economy. But instead of support for such programs, the Republican House seems determined on bringing the country back into a state of recession once more. What Is to Be Done? At the beginning of 2013, the Republican Party would not agree on the proposition of letting taxes return to the level they had been at before President Bush reduced them in 2008 for those with incomes above $250,000 a year. The Republicans would only agree on taxes being increased for those with incomes above $400,000. In this they revealed themselves to be the party ruling on behalf of the interests of the people with incomes between $250,000 and $400,000 a year. Mitt Romney put it another way when in a private conversation in West Palm Beach, Florida, with wealthy supporters he claimed that 47% of the population of the U.S. were takers and wanted the government to look after them. Beyond the present sequestration crisis, this is the problem that we face, namely a Congress where the majority of the elected representatives see themselves as governing on behalf of the wealthy. So until “we the people� change the makeup of Congress we will be facing more fiscal cliffs and walls and having our homes, our incomes and our lives sequestered by those who consider the people as moochers and takers. Michael Drohan is a member of the board of the Thomas Merton Center and of the editorial collective.
A Distributive Injustice by Diane McMahon Photo from www.Jobs-not-wars.org.
Sequestration is a term adopted by Congress that describes a fiscal policy first proposed by the Gramm-RudmanHollings Deficit Reduction Act of 1985. The act states that if Congress cannot agree on ways to cut back the total deficit (or does not pass a new, Budget Resolution with a higher limit), then an "automatic" form of spending cutback takes place. This automatic spending cut is known as "sequestration." (Source: http://tinyurl.com/ azxvkby) The total sequestration package that has been put forth in 2013 by President Obama is about 1.2 trillion dollars, to be accomplished over the next 10 years. In theory, the sequestration package requires every agency to have the same percentage of its appropriation withheld in order to limit excessive spending on an "across the board" basis. If proportional sequestration occurs, cutbacks in already severely pared down safety-net programs would have a crippling impact on the poorest and most vulnerable Americans. At the same time enormous Pentagon budgets that drive acts of war and re-occurring military contracts (e.g., drone warfare) would feel little impact because their budgeted allocation is already disproportionally higher than what is allotted to already diminished safety-net programs. To date, Congress has been unwilling to let these inhumane cuts happen....but it appears that the moratorium is coming to an end. Balancing the budget is something to aspire to, but only if we realize that large military budgets fund war(s), destabilize international relationships, and drive our federal coffers into a state of financial ruin. If we are to survive ourselves, we must prioritize economic, environmental and humanitarian values, which work for the common global good. Please join us in the fight for distributive justice, become a member of the Merton Center and participate in the activities that we are supporting and organizing for to combat local and global injustice. Diane McMahon is Managing Director of the Thomas Merton Center and member of the editorial collective.
March 2013
NEWPEOPLE - 5