The Lesson of Sequestration
Before the March 1 sequestration deadline, Americans heard in the media that some would lose their jobs or receive a pay cut if Congress didn’t act to prevent automatic, across-the-board spending cuts. However, if the first few weeks of sequestration are any indication, it has actually helped our economy, and it could be proving what budget-conscious pundits have been saying for years: we can’t spend money we don’t have.
As sequestration approached, fear mongering abounded. Breathless media reporting, fueled by presidential hyperbole, made it sound like the 5 percent cut in non-defense discretionary spending would bring about the downfall of the republic. Education Secretary Arne Duncan said, “There are literally teachers now who are getting pink slips,” because of sequestration. President Obama said it too; Capitol Hill janitors “just got a pay cut.”
Fact checkers have found these statements to be false.
Yet, nearly three weeks later, we’re still here, and the economy hasn’t collapsed.
Meanwhile, both houses of Congress have created budgets, the first time in 92 years that Congress, rather than the president, has started the process. This is especially impressive for the Senate, which hasn’t passed a budget since 2009. This miraculous action can be accredited to pressure from No Labels, a group with which I’m engaged, to pass the No Budget, No Pay Act, a law that holds congressional paychecks until a budget is approved.
Sadly, the budgets presented by both sides are rather weak.
The House budget, authored by Rep. Paul Ryan (R-WI), balances the budget within 10 years and relies heavily on the repeal of Obamacare, entitlement cuts and a proposal to revamp Medicare into a voucher-like system. Considering Democrats attack Republicans for even suggesting entitlement and spending cuts, the Ryan budget gets points for some measure of courage. However, even some Republicans argue that the budget doesn’t cut enough and is too moderate for their tastes.
If the House Republican plan could be attacked as incomplete, the Senate Democratic plan released last week is alarming as it almost totally relies on $1 trillion in unspecified tax increases over the next decade. It includes no serious repeals, restructurings or overhauls of government spending. By relying so heavily on tax increases, a push by the left wing of the Senate Democrats, it seeks to scuttle any hope for revenue neutral tax reform. Worse, it doesn't even come close to balancing the budget.
Both budgets are expected to pass, but it is unlikely that both chambers will be able to find compromise. Until our members of Congress accept the fact that we have made promises to ourselves that we cannot keep, the future of our nation and the next generation is imperiled.
We are in financial trouble, and if we can’t stop the feds from borrowing and printing more money, then woe to us, and woe to the political leaders who have failed us.