Saturday, September 15, 2012

Short: The sequester quantified

I'm not a complete nerd, but I long ago decided not to be scared of numbers, so I looked at the 394-page sequester report. The report is actually pretty simple-- it lists federal agencies and how much their budgets are going to be cut, like this:

The cut levels are 2% for some special favored programs (like Medicare), 7.6%, 8.2%, and 9.4% (mostly for defense programs). Some lucky programs have no cuts, like Social Security and Medicaid. The overall savings from these cuts are just $1.2 trillion over 10 years, that is only $120 billion a year or one-tenth of our current deficit.

The cuts and the which functions would be affected were determined by the debt ceiling deal that passed over a year ago. The Congress people who passed this legislation probably know what they voted for, and could probably put together this report, but they hoped to embarrass Obama and pin the cuts on him. That's a pretty weak ploy. Personally, I'm glad the debt ceiling deal had teeth. Finally a bit of fiscal sanity.

Anyone complaining about this had better make a damned good argument against these cuts and offer a better alternative.

One additional reflection: It takes 220 pages to list all the federal agencies and bureaus, though I fear that maybe even this listing isn't all the federal bureaus. This makes me wonder if the federal government is trying to do too much. However, I didn't see obviously ludicrous agencies. Maybe ending non-ludicrous agencies is part of budget sanity too.


Anastasios said...

Just being pedantic, but I think you mean "agencies" rather than "departments.". Or do you mean "programs," which is something else again?

ModeratePoli said...

@Anastasios, you are correct, so I'll edit the post. Many thanks for the correction. The report itself refers to the units being evaluated as "Agency / Bureau / Account / Function."

Anonymous said...

By "non-ludicrous" agencies, MP, do you include the Ministry of Silly Walks?

But seriously, this is a big country with lots of stuff going on. Left to itself, we know that self-policing does not work and that is what much of government, at least the executive branch, is designed to do. They set rules so that businesses and consumers know what to expect and attempt to enforce those rules -- which will, admittedly -- interfere with some people's plans to gain advantage or profit.

Much of what the federal government does is insurance. Defense might be adequately categorized that way as well.

There's wastefulness and obsolescence in every large organization, and in every department of a large organiztion. Across-the-board cuts can be indiscriminate or discreet. Frankly, I think we could cut defense more than 9.4% as be just as "safe". We can probably cut social security, too, for high-income earners as a sort of retroactive tax for when the earnings limit on social security capped their contributions.

I favor discriminating cuts to spending based on rational, equitable analysis and implementation. Demagogues favor indiscriminate cuts to score political points.

ModeratePoli said...

I also favor targeted cuts over indiscriminate cuts, but there was no way careful targeting was going to be done last summer. Maybe if they reconvene Simpson-Bowles, my heroes who refuse to die.

Since we weren't going to get carefully targeted cuts, the cuts as done aren't bad. I do like that it will cut government department expenditures, but not its outlays to people. (Those outlays need trimming to, but I'd rather trim gov payrolls/expenses first.)

Anonymous said...

I understand why S-B appeals so much to you, MP, but the core of their proposal was not moderate, it was highly conservative. The notion in the U.S. is that the country is right-center, but that is not the case on issue after issue. S-B left the Bush-era tax breaks for the wealthy in place. That rubber-stamps the primary conservative goal of the last decade that produced the structural budget deficit in the first place. That should have been the first item to reverse in any "moderate" proposal.

Next to go should be the current treatment of capital gains, which is the biggest loophole ever invented, creating an advantage for one form of income over another, and employing 1000s of tax lawyers and accountants. There's a moderate proposal out there for that, but I don't see it in S-B. And don't get me started in inherited wealth.

We can reform entitlements but it has to be done to protect a) the safety net and b) make sure that people who paid into the plan don't feel cheated. S-B did OK on that, but a greater focus on means-testing rather than absolutes is what is needed.

Since the GOP won't compromise on any tax items, endorsing S-B or any similar proposal only makes it harder to achieve a result. That's negotiating 101. S-B was designed as a mediation, not a binding arbitration, of the deficit litigation. Hence, either the sides agree to binding arbitration in some form, or litigation in the political circle must continue without one side negotiating with itself. Not accepting S-B as his new position was one of the wisest things President Obama has done. Maybe after his re-election we can get something like S-B. If he had adopted it then (or now) the GOP would pound him relentlessly on the negative parts of the plan, and he'd lose and we'd have none of it anyway.

ModeratePoli said...

@Anon, S-B didn't leave all Bush tax cuts for the wealthy. It eliminates the special low rate for dividends and capital gains, making all income taxed in the same way. So people in the 28% bracket actually pay much closer to that rate.

As for the conservative aspects, when it comes to money issues I am conservative, as in cautious.

Before you dismiss S-B, you really should research it more carefully because you seem to misunderstand some of its basic ideas. My summary here includes links to sources. Why I don't mind the S-B plan being called conservative here.