Sequestration’s First Victims … Job Creation & Economic Development

Sequestration. Some love it … some hate it. From every bit of tape and print i can find from 2011 and 2012, no one that voted to pass Sequestration ever intended it to go into effect as written. It was a stupid bluff that was never supposed to happen. Well, the joke is now on the entire population because it is going to happen. Only a Continuing-Resolution or an actual Budget approved through regular-order in late March 2013 will re-prioritize the sequester cuts. Until then America gets to watch a new reality tv show called : “The Inmates Are Running The Asylum”.

Do the inmates like sequestration? Clearly some do. Most do not. One thing ringing true in this debate is both sides acknowledge cutting $85B from the economy in 2013 and another $110B each year thereafter will have a net impact on jobs. No one believes the net impact on job creation, job retention, wage growth, economic development, or national GDP growth will be positive as a result of this particular sequestration being implemented as the current law call for. The implementation of Sequestration as written will not grow any new jobs in the economy in 2013. Creating even more Unemployed Americans does not shrink federal spending nor reduce the deficit.

I think this current national legislative-sequester-reality should create some real concern on the part of we-the-people. Debt reduction is very important. Job creation is very important. One can’t be allowed to cause the other to damage GDP growth in 2013. I think we can at least agree with that assessment.

I recall the national debate in 2011 and 2012 being completely centered around the caus celeb: “Where are the jobs?” What happened to the chorus of job-creating evangelists in 2013? As a job-creation evangelist myself, it is getting mighty lonely out here because none of my fellow job-focused mates seem to be doing anything to stop the self-inflicted head-slap we call by the pet name, sequestration.

How does Congress spend the last 30 days doing nothing to help business people create one new job while letting something they did do in 2011 go into effect and help people in all 50 States (as well as 3 US Territories) LOSE JOBS?

Most Americans do not want to do something that will eliminate jobs unless those jobs are related to waste, fraud, abuse or have no functional necessity . Most Americans actually want to keep the jobs that make sense, are effective, and help we-the-people realize the promise of life, liberty and the pursuit of happiness. Surely no elected representative of the people would knowingly cut jobs and demand across-the-board just to save a buck even if doing so might actually cost the nation more money and in some cases, more than just money?

Well guess what, the circus is back in town and they are operating by using you, your family, and your business as their net. And yes, they continue to fall off the trapeze.

Two schools of thought are being professed:

1). You believe cutting $600B in defense spending will hurt private sector demand, eliminate the jobs of many working Americans, and potentially weaken our readiness.
2). You believe cutting $600B in discretionary spending (FBI, Education, TSA, IRS) will hurt private sector demand, eliminate the jobs of many working Americans, and potentially weaken our quality-of-life and readiness.

However, the elected officials are now saying they do not want to hurt jobs in the process of sequestration. Huh?

In this case, one might say they could reduce the pain of Option 1 by transferring all of the impact to Option 2. Another might say reduce the pain of Option 2 by transferring the pain to Option 1. Both ideas are fairly simplistic and completely idiotic. Why? Because jobs and economic demand are impacted the same in both Option 1 and Option 2. Ridiculous!

Medicare, Military Payrolls, Social Security, Medicaid , Anti-Terror/CIA Black Budgets, VA Medical are all exempt from sequestration cuts. This is considered a win by some. However, as a result of this much spending being off-the-table, the actual cuts to the entire Federal Budget is not 3% as you hear the “simpletons” repeating, it is a cut of more like 8% of every other budget line item.

Let me repeat, sequestration cuts 8% across the board of every budget line item other than Medicare, Military Payroll, Social Security, Medicaid, CIA Black Budgets, and VA Medical. Those programs have zero cuts. This is not a simple 2.5-3% cut of all Federal spending. At 8%, few businesses could ever intentionally accept across-the-board cuts without discretion and still operate a successful business; especially if they could deploy other more intelligent business strategies like new financing, increasing new revenue sources, or dramatically changing the entire business model. Government is not like business in many regards but especially in this regard : Government can’t just get out of the business of representing we-the-people and running an effective Government. No BK for the world’s largest economy. We have to actually make this thing work.

The next time someone gives you that smooth drawl with those caring eyes and says: “Don’t tell me we can’t find a simple 2-3% cut in our huge Federal budget without all this doom-and-gloom”; smack them in the forehead like a scene from the Three Stooges. They are lying and they know it. They know the entire Federal Budget is not being debated or covered by Sequestration. Make them show you how they deal with a 100% cuts-only model and still add jobs and improve GDP in the economy in 2013 & 2014.

Today, Ben Bernanke testified to Congress. For the first time I thought I heard him give Congress clarity and not “Fed-speak” with his answers. He actually said to damage the nations economic growth and GDP over the next few years by enacting the sequester as written will hurt the country at a time when short-term damage is not necessary. He said the timing of cuts was more important to the economy since the problem is most damaging out past 10 years. He suggested a balanced approach to long-term deficit reduction and the concept of easing and ramping the cuts over a longer period. This is how America can reduce the deficit and not harm job creation.

I listened to his testimony twice and was happy to finally hear him say something actionable for the elected officials. If the elected officials were listening, they received valuable input to deal with an alternative to the looming Sequestration or the coming Continuing Resolution/Potential New Senate Budget in late March.

One last item: spending bills that impact the tax code and appropriations must begin in the House. This is a Constitutional requirement. There is a legislative term referred to as a “Blue-Slip” problem if the Senate goes first. In other words the House can ignore the Senate by Constitutional practice. This actually happened when the Senate passed a bill last year dealing with tax-rates going up over $250k that passed with a majority Senate vote yet the Speaker said the bill did not have any force due to a blue-slip problem and would never go through a House & Senate conference process for passage.

I bring this up because the House needs to get off its collective ass and start doing something that helps the private and public sector create good, effective jobs. After all, we pay them (Congress) to work … not stop the rest of us from working.

“Where are the jobs?”

If the sequester’s implementation is going to hurt effective/necessary/efficient job creation and economic development … why in the hell are we not changing it? It is not acceptable for Job Creation and Economic Development to be the first victims of Sequestration.

I would love to hear your comments.

This entry was posted in "We-the-People - 1 Business Dude's Perspective on Current Political Theatre, 4 Year Comparison, Are You Better Off, Election Promises, elections, employment report, Fiscal Cliff, flip flops, Jobs, medicare, National Security, Sequestration, tax avoidance, tax loopholes, Tax Rate Discussion, truthfulness, two faces, Uncategorized, unemployment report and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

5 Responses to Sequestration’s First Victims … Job Creation & Economic Development

  1. btg5885 says:

    The sequestration is like losing the wind while sailing. The economy has been on a slow journey upward (as past data showed it would) for over two years, but this could cause it to lose some momentum. On the job creation side, I have seen little from this most ineffective Congress ever. The only gains have been incremental, but they have added up to help promote some growth – the 2% FICA tax abatement for two years is one thing that helped as did the stimulus package which was not perfect, but helped with growth, so says independent economists. Yet, we need more and it is not coming. Thanks for writing, BTG

    • vincentmudd says:

      Nice metaphor. I was interviewed in my role on the Economic Development Corporation yesterday and the reporter asked me for a statement to share with the television viewers. After reflection I stated: “America just witnessed a Congress whose tearful Speaker used to scream: “Where are the jobs, Mr. president – take 19 months to institute a sequester plan designed specifically to eliminate thousands of American jobs and specifically not assist in the creation of one net-new American jobs. How much larger a failure could any elected body be?

      I seriously think as the slow grind of frustration grows in 2013, 2014 is going to be a very focused election. Someone is going to pay for slowing down the economy is such a self-molesting manner. Economic Molestation should be a crime!

  2. btg5885 says:

    Well said. Actions speak louder than words.

  3. Michael says:

    I think of it the way another poster said

    “If we can’t cut such a relatively small amount without projected disaster, they are going to need to admit we’re past the point of no return and we’re on a unwavering course of ever increasing debt until we crash.

    Or that it’s mostly all hype. One or the other”

    If these cuts are as bad as they seem and the thought that each year Congress would do nothing. Would not a Public Outcry be needed to change things. Otherwise it seems are we are doing is “kicking the can down the run” and “No Accountablity”. Though I realize cutting everything blindly is not the best way to do things but than again these cuts are hardly the chunk that’s needed to reduce our Debt to reasonable levels. Just think if the these cuts bring out all the lobbies and outcry by poltiicans what do you think the bigger cuts will do? My Uncle was all pissed off about defend cuts and used the 10 year talking point line haft 1 Trillion over 10 years.

    My view is congress can vote and pass bills. Congress can vote or pass bills restoring Cuts they deem “Wrong”. If congress can’t do this than the public can vote for people who can. If the public can’t do this than you get what you vote for. I been following politics(sadly) for over 10 years now and have realize there’s even less accountablity for anything our politicans do. I think the Sequestration can actually bring some. If congress can’t work because of say the “Filibuster” or policies than those can be changed. Otherwise we can keep watching the Rerun TV show and at the end keep being shocked that the show ended the way it did.

    Something needs to change.

    Side note,

    The defense cuts and loss of jobs from such cuts(after 22 days) Is interesting, while we left Iraq(besides our 50k state department) and reduced the # of troops in Afganstain. The cuts to defense is still being presented as a “Chicken Little” senernio

    • vincentmudd says:

      I’m not sure why it is so hard to understand that an 8% cut to non-military payroll is going to create financial hardship for many that deal with the defense sector. Stop saying a “few percent”. 60% of all gov’t spending was intentionally left off the sequester. Of the remaining 40%, Congress has mandated cuts of between 5-8% per line item. This is very simple and it was done once before in 1985 so everyone knows how it works. It will not end the earth but the impacts are not necessary if your goal was to help the US economy.

      Here is the best way to look at it. At private business hope to have a profit. If they can achieve 5-10% net profit, they are doing great. This is why we can afford to cut the $5-10B subsidy to the oil industry … they are netting over 6-10% net profit ( I hate to pick on the O&G folks but the example is easy to understand). The federal budget does not have a provision for profit. Although it can be argued that there is room to cut without any negative consequences if they have flexibility, the fact is there is technically “no extra profit to be cut”. Congress, not the President nor the departments, is the appropriator and has passed laws that specifically tell the departments how to spend and on what priorities. The stupidity of the sequester is not what they could have done to make the cuts work better; it is what they actually did that made it worse. And just to be clear, Congress had the power in 2011 and has the power today to change what they did to make it worse.

      My post was dealing with the fact that job creation and growth were the big deal in 2011 and 2012; the passage of the sequester and the intentional failure to fix it will specifically cost the nation jobs and growth. If this is a good thing, I can’t see it. Winding down defense spending the Pentagon says are reasonable makes sense as does eliminating duplicate discretionary budget departments. Even those cuts would impact the economy and reduce spending as well. My question is this: How would you like to economy to function over the next 2-4 years? Based on your answer, is this the right way to do it?

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