Tuesday, March 5, 2013

Putting the Sequester in its Proper Perspective

Why is it viewed as a non-event when companies are forced to tighten their belts a lot but is sold by our president and his followers as a worldwide calmity when the federal government has to slow the rate of spending additional taxpayer money?

I don't get it. But then a big government financial 'progressive' admittedly I'm not.

Sequester is much ado about nothing is subtitled 'Day four of the sequester and the earth is still turning:'

"Have you felt the effects of the sequester yet? Neither have I, although to listen to the administration and its agencies you would have expected doomsday to be well underway by now.

Let’s run through our checklist to see what I mean:

  • Our military is still the best in the world;
  • Our economy is still growing — albeit at a glacial pace;
  • Unemployment hasn’t suddenly soared;
  • Federal benefits are still being paid;
  • Air traffic may be a hassle, but no more so than usual;
  • No food shortages are apparent from a lack of federal inspectors;
  • Teachers are still teaching; {NOTE: Despite what Labor Secretary Duncan said and not considering what's happening in Dixon, Illinois.}
  • Researchers are still in their labs.

Here’s why nothing has changed: $85 billion may be big bucks to you and me, but it is only a rounding error in a budget of $3.5 trillion. Indeed, according to the Congressional Budget Office, the actual cuts this year will amount to only $42 billion if the sequester is allowed to run the full year.

To put this number in perspective, it comes out to little more than a penny out of every dollar the government spends. Now if you believe that cutting anyone’s budget by a penny on the dollar is going to mean the end of Western civilization as we know it, I have a cave I would like to sell you.

Even more important, we are not talking about an actual decline in spending here, just a slowing in the rate of increase. As a matter of fact, virtually all federal agencies’ budgets are larger today than they were at the beginning of President Obama’s first term — even after the sequester.

Here is what has happened: in an effort to forestall the sequester, the administration has convinced the media that the sequester means that doomsday is at hand. In turn, this has been repeated as the gospel truth all over the airwaves, print and the Internet.

Jay Carney: Sequester has 'serious consequences"

But it appears that doomsday has been postponed, as the president acknowledged over the weekend.

When doomsday will arrive is not entirely clear. Maybe this is because it will not make an appearance at all. . . .

In reality, what this economy needs is more federal spending until the private sector gains enough confidence and money to spend, hire and invest.

However, as long as the president continues to cry wolf over the effects of the sequester, instead of pointing out the economic importance of not cutting spending, he will scare the bejesus out of the American people."

Summing Up

Whether we need more government spending or not is at least debatable.

What is not debatable is that only the private sector can lead us out of this mess.

But that's obviously not the way President Obama sees things now.

Still, he's a smart guy, so even he will see clearly and do the right thing eventually.

In the meantime, we'll muddle through while he and the rest of the 'progressives' wander around in the darkness and continue to unnecessarily waste our time and money.

But at least he's evidently decided to stop crying wolf, at least for now. That's a good sign.

And when President Obama starts making noises about the need for private sector investment and is willing to seriously address both government spending and tax reform, we will then be able to look forward to real and lasting U.S. economic improvement.

Meanwhile, keep your fingers crossed.

That's my take.

Thanks. Bob.

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