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LAMBRO: The cuts that didn’t bleed
Fears of sequestration doom prove overblown
Question of the Day
Have the federal budget cuts caused by sequestration had any impact on your personal life? How about the 16-day, partial government shutdown?
Despite all of the handwringing here in Washington and President Obama’s hysterical warnings of fiscal and social upheaval, economic pain and deprivation, relatively few Americans said these spending cuts had an impact in their daily lives, according to surveys.
The government’s so-called essential services were not affected in any significant way. The economy grew, albeit very slowly, but it was growing slowly before sequestration and the shutdown.
The country went about its business. The stock market rose to new heights, untroubled by the spending cuts, and earnings rose for many corporations, boosting their equity values, which in turn benefited millions of 401(k) retirement plans for America’s workers.
Furloughed federal employees got paid for their time off. The economy continued to create more jobs, though at its same old, persistently sluggish pace.
You will recall that the automatic sequestration came about in the Budget Control Act of 2011, which took effect in March 1, 2013. It called for $85.4 billion in annual reductions; that worked out to $42 billion in actual cash savings.
To the average American, that sounds like a lot of money — and it is — but relatively, it’s a thimbleful compared with a $3.6 trillion federal spending budget that is racing toward $4 trillion during the next couple of years.
The sequestration cuts didn’t touch programs such as Social Security and Medicaid, or federal pay rates, including the military.
House and Senate budget leaders are meeting to find a compromise on a long-term budget that could repeal sequestration. If they fail, though, sequestration will remain, reducing expenditures over the coming years.
Right now, the automatic cuts are on track to significantly shrink deficits by about $1 trillion over the next eight years.
Sequestration critics say this is a bad way to curb spending because it is indiscriminate in its targets. Good programs get cut, while bad programs that should be slashed deeply or abolished, survive with their accounts mostly intact.
Still, sequestration has, by all accounts, been an effective budget-cutting weapon at a time when Congress has been unable to agree on a slimmer budget, or at least one that Mr. Obama, who worships at the altar of Big Government, will sign. Don’t bet on that happening.
According to the Congressional Budget Office, for the first 11 months in this fiscal year, total federal outlays were down by $127 billion. OK, that’s not nearly enough to get us to a balanced budget, but it’s not chopped liver, either. Thanks to sequestration, spending is being cut, and for the first time since the end of the Korean War, it has declined two years in a row.
That’s what the automatic cuts have achieved, with relatively few Americans noticing much, if any, impact in their lives. It’s only a start, though, and very modest one. The budget is still on an unsustainable path.
If Congress doesn’t change its spending habits, and do so soon, the mushrooming federal debt — the largest since World War II — will reach 100 percent of gross domestic product in 25 years. In other words, we will owe more debt than the size of our entire economy.
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By Mark Davis
The nation founders, the Lone Star State thrives
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