Sequester '13: The Magic Penny Theory

Is a penny on the dollar enough to force Republicans in Congress to capitulate on spending cut expectations?

Five days have passed, and so far the earth has not–as yet–careened off its axis to spin wildly off into the black void of deep space. Commercial air travel did not turn into a nightmare overnight due to air traffic controller layoffs; the schools are still open; and I still had to go to work!

You would think that maybe–just maybe–all the Chicken Little with hair-afire warnings might have been just a little exaggerated. Just a little ...

Recently I finished reading Killing Kennedy: The End of Camelot (Bill O'Reilly and Martin Dugard), and it brought back a lot of memories. One concept brought to mind from the aftermath of that horrific day was the Warren Commission's development of the Magic Bullet Theory. The bullet was believed to be the first shot that struck President John F. Kennedy; and although it was not the fatal shot, it passed through Kennedy and did major life-threatening damage to Texas Governor John Connally, who was riding in the seat in front of the president.

A second or third shot, depending on who you read, ended President Kennedy's life.

The Magic Bullet Theory was originally greeted with much disdain and disbelief by those history and conspiracy buffs, who delighted in disparaging the physics involved and the presentation made by Warren Commission Assistant Counsel Arlen Specter. It was even the subject of a segment on Seinfeld (Watch The Magic Loogie)!

Bear with me here ...

Last week's move into sequestration automatically put into effect $85 billion in across-the-board budget cuts. That certainly sounds like a lot of money ... until you consider that the federal budget for fiscal year 2013 is $3.8 trillion!

The Congressional Budget Office, an apolitical organization that performs independent analyses of budgetary and economic issues to support the congressional budget process, released a report stating that the effect of sequestration cuts for fiscal year 2013 will be $42 billion, not even half of the full measure of $85 billion estimated as sequester-related cuts!

Of course that assumes that the sequestration will last throughout the remainder of the fiscal year. I wouldn't bet the House ... or the Senate ... on that proposition. In fact another trigger date - a continuing resolution - is scheduled to hit by the end of March. Lack of an agreement then could shut down ALL of government, minus the traditional exemption provided the Department of Defense. Will this opportunity also pass without a Presidential Vulcan mind-meld (Sorry, couldn't resist) on a grander solution?

But it's the math involved with this current sequestration that is irrefutable: $42 billion equates to $0.01 ($42 billion/$3.8 trillion = $0.01) for every dollar in the FY13 federal budget. One stinkin' cent ... an Abe, and not the more lovable $5 Lincoln ... One penny on every dollar!

But that single cent is one magic penny!

The magic penny set off the wailing of the sirens of national misfortune and personal misery from the White House and Democrats. There have been almost daily pronouncements of sequester doom & gloom in local newspapers, on national broadcasts, and on-line media. The sequester, a mechanism that was actually resurrected by the White House and proposed by those very Democrats in debt ceiling negotiations, would have profound effects on the country and its citizens at the hands of those heartless Republicans in Congress.

Now all of us, particularly those outside the upper reaches of the top tax brackets, have been under constant financial pressure for the past five to six years. Most recently, you lost the 2 percent reduction in payroll tax from 2010. And while some will argue that the expiration of a tax is not a tax increase per se, the fact is you are paying more in taxes; bringing home less money. Call it what you will, your household is doing with less income.

Even if your wages have held fairly stable over this period, certainly your costs of living continue to rise.

Have those increases in taxes and rise in daily costs been more than a penny on your dollar? Most probably ... Were you able to adjust; do without some things; change plans; push out major expenditures waiting for better financial times?  Probably ... Has your loss of buying power been an adverse development for your household budget? Most likely ...

But you made the adjustments. You do what you can. You bag the rest, and hope for better times.

Sequestration is perhaps the WORST strategy for fiscal negotiations ever to be uttered by any White House administration. And certainly, both sides should get back to work on a solution that will benefit the long-term economic health of the nation. But for President Obama and the Democrats to expect capitulation by the Republican congress on their principles of fiscal responsibility over cuts equal to a penny on the dollar in the federal budget is simply silly.

Yet Washington Democrats–in particular The White House and President Obama–will have you thinking the sky will be falling all over that magic penny! Some of the pronouncements coming out of the White House have been downright hyperbolic.

National air travel would be disrupted; teachers were being furloughed, the President said (That is until the press corps challenged the White House to give one example–just one–of a school district that had issued pink slips. They couldn't). National Parks would be closing; dangerous food situations would increase, caused by the loss of food inspectors; coastal inhabitants would be at the mercy of Superstorms because weather forecasting will be unaffordable; an entire aircraft carrier group held back from active front-line service; grannies kicked to the curb; the nation would totter on the brink of financial ruin; communities would no longer be able to protect its citizens ...

All over one penny on the dollar of a ridiculously bloated federal budget!

That, my friends, is what Seinfeld would call One Magic Loogie!

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Pamela March 27, 2013 at 05:48 PM
Just had to ask Mike, How is that don't believe the furloughs will happen for federal employees? Well in case you haven't been keeping up: Furloughs have been announced to start April 28th 2013, at 1 day a WEEK. That is a 20% cut in pay for a family. If both spouses work for the governement, they have a total 40% cut in pay. Now let us all thank EVERY CONGRESSMAN/WOMAN, regardless of party for letting this happen..
Mike Shortall Sr March 27, 2013 at 06:54 PM
Pam: I do not believe the furloughs will go into effect BEFORE someone in this ridiculous budget farce blinks. I know that SOME agencies have already been given their 30-day; but DOD has already pushed theirs back by two weeks. The DOD story is evaluating the effects of the recent Continuing Resolution agreement. To me, that means they want to see if they can forego the furloughs. Several groups have already been granted non-furlough status; and the IRS is putting theirs off until the summer, which makes sense given tax season. On the other hand, meat and food inspectors are being exempted after the meat packers lobby complained of the billions they might lose if inspectors furloughs caused a backlog in inspections, causing foods and meats to spoil. So don't discount the pressure Washington lobbies, such as defense industry, energy companies, etc. will be putting on The WHite House and Congress to fix this before the shyte hits the ceiling fan. A friend of mine, who works for the Navy, spoke to Rep (NJ) Andrews recently. My friend did not get the word "furlough" out of his mouth when Andrews told him they were not going to let that happen! Andrews also said he believed that any federal employees who did get furloughed - in the worst case scenario maybe for a week or two or three - would be paid in full as part of any subsequent budget agreement. I really doubt either party sees this possibility as a good political move. ANd I'm betting they won't happen.
Mike Shortall Sr March 28, 2013 at 12:50 PM
And today, Pam, as if on cue the DOD announced that civilian furloughs days will be cut from 22 to 14! And they will not take effect until mid-June at the earliest. I have included the article, which also states that some service branches were ready to do away with ALL furloughs. But in deference to those wservice branches that could not (I'm assuming that would be the Marines and Army, although I'm just guessing.), senior DOD leadership decided to continue to treat ALL civilian DOD employees the same. Now, to me this means that the services have found other places in which to make these budget cuts, the effects of which - in many opinions - have been grossly exaggerated. Also, in pushing their cuts back to mid-June, they continue to push the furlough window to the right - on the timeline - in anticipation that a bidget deal of some sort will be forthcoming. http://news.fredericksburg.com/tenhut/2013/03/27/with-continuing-resolution-signed-fewer-dod-furloughs/
Pamela March 28, 2013 at 01:08 PM
And if you do the math, depending on when in June these furloughs starts., there are only 14 weeks til the end of the fiscal year in Sept. That still equates to 1 day a week off without pay! So instead of a 22 week pay cut, they are only getting a 14 week pay cut. Glad you can still justify a 20% decrease in pay. Oh and lets not forget that this is only for this year. Oct 1 2013 starts a new round of cuts.
Mike Shortall Sr March 28, 2013 at 01:36 PM
Pam, did you read the part of the article where several of the services are already able and willing to do away with ALL civilian furloughs, but are only keeping them in place so that all DOD employees are treated EQUALLY??? For the time being anyway ... I still predict - consistent with everything I have said, and everything that has happened thus far - that NO DOD EMPLOYEES will end up being furloughed due to this Democrat-created sequestration gambit.


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