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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!

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Pamela March 06, 2013 at 03:05 PM
Wow, you really didn't do alot of research did you? first of all while the Sequestration went into effect on March 1st the cuts will not be felt until the end of March. That while these cuts were designed on a 12 months basis, there is only 8 months left to the federal year(Nov-Oct). You do realize that federal workers are being forced to take off 2 days a weeks without pay. That is a %40 cut in weekly salary. I'm pretty sure to a single parent with 1 income, that could mean whether there is food on the table or a bill gets paid.. It's rather shocking that you find this situation to be over exaggerated.Now if you had mentioned that our 400+ Representative each had a yearly budget of $1.4 million, Or if you had bother to find out what our Senator office's yearly budget was, I would have given you some credit. Or just maybe a remark about apply common sense cuts to bloated federal government. Instead you show that you have not a clue to the true impact of these cuts.
Mike Shortall Sr March 06, 2013 at 04:06 PM
Pam: You and I are simply pawns in this political struggle. I'll be glad to discuss any facts that dispute what I found and wrote in the above. Frankly, I don't for a second believe that any of these cuts will last for more than a few weeks, and will be fully reinstated once one side or the other capitulates on the spending/revenue breakdown. It has been proven that The White House is going to great lengths to exaggerate the effects of the cuts and - in some case - to frame them in a way that are the most painful and that are publicized as much as possible. This is why you see reports of TWH cancelling public tours. How much money do you think that is really saving? Federal employees MIGHT be subjected to a 20% (2 days over a two-week pay period), not a 40% cut. And no one - as yet - in the Federal Government has been officially notified that they will be furloughed. Those furloughs can not go into effect until late April at the earliest. And I am taking bets that they never will be made. This sequestration will be ended perhaps as soon as the end of March, when a potential government-shutdown avoiding Continuing Resolution is due for approval. Don't buy the hype. It's all meant to put as much pressure as possible on Congress, nothing more.
Jeanette Appice Zeitz March 06, 2013 at 06:52 PM
Well, when my company took 10% of my pay I still had to work my full time schedule, if they are getting the days off that is a better deal than I got.
Jeanette Appice Zeitz March 06, 2013 at 07:04 PM
http://www.washingtonpost.com/blogs/fact-checker/post/capitol-janitors-making-ends-meet-with-overtime-nope/2013/03/05/f07a4f8c-85f9-11e2-9d71-f0feafdd1394_blog.html
andthatsthetruth March 07, 2013 at 11:35 AM
According to the latest blog right here on patch, Wissahickon School Board has already started bringing in others at a reduced cost to the district and stepping over the union lines. There is no doubt that they had these cuts in mind prior to this month. The end result of their actions is that the taxpayer will end up paying for their misjudgement. Yes, another bite the bullet for us. These federal employees are common people like you and I, the news reports it like it's our business - so we all know. The government needs to figure out how to skin their fat. Taking salaries from employees is an easy fix. Not logical. It boils down to expenses the government generates on a daily basis. They have to look at the whole picture and start cutting back. As we all have done for the last 6 -7 years. ie: When cable goes up you switch or do without. Common Sense approach. Something they haven't done yet. Or they just don't want to. Putting it off for as long as they can not to hurt their own pocketbooks.
Mike Shortall Sr March 07, 2013 at 02:24 PM
I am convinced you will not see the furlough of Federal employees. That LAST THING the Obama Adminstration wants in the months and years leading up to the 2014 Congressional elections is the perception that the sequestration was THEIR idea, and that it, along with the inability to make cuts of at least $85 billion to a bloated $3.8 trillion, ended up hurting MIDDLE CLASS families!
Pamela March 07, 2013 at 03:31 PM
Yes it is a 20% cut to their pay and I can tell you from experience that I took a 5% pay cut and it hurt our family. The Continuing Resolution has nothing to do with Sequestration. One is a bill designed to keep the government running til the end of the fiscal year (Oct 31 2013) and the other is automatic spending cuts. The sequestion is not new, and it will hurt middle class families.It it will not be perceived as Obama's fault, it will be perceived as Congress' fault. Congress had the last year to come up with a plan to implement these cuts and did nothing. They also had the chance to give directors and divisions the right to decide how to make these cuts. CONGRESS did nothing. As far as the WH tours, they were cancelled due to the Secret Service budget getting cut. How do you have a tour of the WH, the home of the President of the US, and not have SS Personnel...DUH you don't... State parks are delaying things like road repairs inorder to lower budgets. It will get done, but the parks will be open two weeks later. Nice for all those town that rely on tourism. New Hampshire will begin to notice the impact as the companies that have government business are now looking to shift their work to foreign countries. Companies that work with the govt began laying workers off in Janurary/February. Most retail companies which anticipated hiring are now waiting inorder to see what happens. If AMerican families are not spending money, then there is not reason to hire workers.
andthatsthetruth March 07, 2013 at 04:32 PM
I wasn't sure how long ago I had seen a moving truck at a historical building I was driving passed, they were removing the things out of the building. Who knows where the items went? Here's an explanation - The PHMC (Pennsylvania Historical and Museum Commission), who owns Hope Lodge and numerous other state sites, has suffered severe budgetary cutbacks. We have been challenged to consider future alternatives. This is marked 2010. So the state of PA has been closing things all along. You are absolutely correct that without these tourism sites, everyone suffers. Those day trips that my kids always ask for and say often " Gee we never took a vacation". How can you? Even if you win a trip you have to afford the taxes. It's a presumed & is evident, that Congress is NOT doing anything. On the evening news every night, what has Congress done for you today...? They usually are busy fighting over who is going to be made Head of a Dept. Vacancy cause by the New government 2013. Spending the time trying to find out what happened in Newtown, Beating up Hillary, Situations that are over and really isn't any of their concern at the moment. Things that have happened are over. They are making up excuses & agendas so that don't have to deal with the real important issues. Congress works 4 - 6 months a year maybe. Not 8 hr days. While we all try to figure out how to get income into our houses to survive. 7 days a week , 12 hours a day. This equation is a bit out of balance.
Mike Shortall Sr March 07, 2013 at 04:36 PM
Pam: I doubt we're going to see eye-to-eye on this, so I'll just respond to some of the statements you made and provide you some information I have found that you might want to consider. 1. I agree that a 20% cut would hurt federal employees. And I'm still convinced that won't happen, for no other reason than the 2014 Congressinal elections. I'll let you draw your own conclusions about which side would be hurt worse by allowing that to happen. I think the Democrats will suffer more. 2. Keep in mind that sequestration was The White House's idea for dealing with the 2011 debt ceiling negotiations. It was a gamble on their part that they could prevent it from happening. It didn't work because President Obama refuses to propose significant budget cuts despite getting tax increases in January. 3. I believe you are wrong in suggesting Congress limits the Department Secretaries from deciding how to apply the cuts. From what I know about Executive Branch budgets, that is entirely an Executive Branch responsibility. Suggested reading: http://www.humanevents.com/2013/03/05/memo-from-washington-to-bureaucrats-make-the-sequester-hurt/ 4. That the Secret Service budget cuts would prevent White House tours is silly. The Secret Service doesn't just leave TWH unprotected regardless of what's happening financially. They still have to be there to protect POTUS and the grounds. Once again, it's The WHite House strategy to make the cuts hurt as much and as PUBLICLY as possible!
Stephen Eickhoff March 07, 2013 at 05:14 PM
If anyone has to drop 16 hours of work a week, it's because the President and his lackeys are making it happen for political gain. Imagine if your household suddenly experienced a 1% loss... maybe you make $60,000 and had an unexpected car repair for $600. For $600, would you suddenly have to pull your kids out of all their extra curriculars, shut off the cable TV, and start using the food bank? No way! Maybe you won't be eating out or going to the movies for a few months. BTW, Rand Paul's office is the only one that consistently returns at least 10% of its yearly budget to the treasury. Just about everyone else sucks every dime out of that 1.4 million.
Stephen Eickhoff March 07, 2013 at 05:17 PM
Correction: the Senate did nothing. The House passed two budget bills. BTW, cutting the White House tours only saves less than $1 million over a year. THE PRESIDENT IS PLAYING US.
Pamela March 07, 2013 at 05:21 PM
The Budget Control Act states that the ‘same percentage sequestration shall apply to all programs, projects, and activities within a budget account,’ This means you have to cut everything the same percentage, whether it is a vital service or not.
Pamela March 07, 2013 at 05:22 PM
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/20/the-sequester-absolutely-everything-you-could-possibly-need-to-know-in-one-faq/
Mike Shortall Sr March 07, 2013 at 06:45 PM
Well stated, Stephen.
Mike Shortall Sr March 07, 2013 at 06:59 PM
Well, that information does not jive with news reports of Department Heads publicly announcing how they planned to mitigate the effects of cuts or requesting to spread cuts out. It also contradicts DoD/Navy plans to cancel the voyages of particular ships or Task Forces (i.e. U.S.S. Truman Persian Gulf tour) as opposed to say cutting all ships operations by such-and-such a percentage. If that is the hard truth about applying the sequester cuts, then wouldn't The White House tours simply have been cut back in hours perhaps, instead of an outright cancellation of ALL tours???
Mike Shortall Sr March 07, 2013 at 07:02 PM
I concur that BOTH sides are responsible. But I give House Republicans credit for keeping Democrats' and The President's feet to the fire over promised spending cuts. Aside from the offer to tie Social Security (and Medicare?) COLAs to the CPI, I can think of NO substantive cuts proposed by Dems or The President.
Mike Shortall Sr March 07, 2013 at 11:10 PM
FYI: On the canceling of White House tours ... Price tag: $74,000 a week! So who still thinks this isn't about scoring political points?!? http://www.politico.com/politico44/2013/03/white-house-tours-cost-a-week-for-secret-service-158762.html
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The Illuminati March 09, 2013 at 10:55 PM
Maybe many of those employees can be brought back from furlough if we stop giving $1.5 billion in aid to Egypt! A country run by the Muslim Brotherhood... an elected president who refers to Jews as descendants of pigs. Perhaps that would be money more well spent here...of maybe the USDA can forgo the $300k they spend annually to promote caviar tastings. Or the $33k the government spends every year on smokey the bear balloons? There is waste everywhere! Why is it that instead of cutting this wasteful spending, the left always wants to tax the rich into oblivion? Spending is the problem folks...not revenue.
Jared Frye March 09, 2013 at 11:40 PM
All the people buying into this furlough hype is driving me crazy. I manage a large branch of a fortune 500 company that you have heard of. Several times (and for extended periods) over the last few years, due to economic issues, we have had to cancel or delay bonuses for management and rank-and-file workers, cut back to 32 hours per week (there's the furlough), close branches and lay off workers. All of these things were done because we are responsible to our employees, shareholders and customers to be here tomorrow. The fact that the government is just now having to take these steps just shows how little they are responsible to those that THEY "serve."
Mike Shortall Sr March 10, 2013 at 12:44 AM
I discount the furlough as simply part of "the message" The White House wants out there .. Doom & Gloom for all mankind due to stubborn Republicans in Congress. I doubt the furloughs will ever be enacted. They cannot be put in force until late April, which leaves another 6 weeks for a deal. The last thing the Obama Administration wants is middle class workers being furloughed and then associating it with a convoluted idea proposed and agreed to by The White House. Won't happen.
google that March 10, 2013 at 06:17 AM
Here is an idea take the money that we need for cuts from the money we give away over seas to other countries. We need to stop this spending it is out of control, Republicans are just as much to blame as they seem to almost always increase, or not cut, military spending. We need more cuts and sooner then later. Also another idea. Reduce the corporate income tax from over seas by half. Companies like Apple keep their big money out of the USA to avoid taxes, who can blame them, cause the USA has one of the highest in the world. If we cut it 50% for 1 year we would see a large cash flood into the USA. This would generate funds as well.
Ed Vorwerk March 11, 2013 at 11:50 PM
Yes. Let's review all of our foreign spending. Some thoughts to consider: • Start over with all foreign aid. Can someone explain why we give aid to Iran? Russia? China? PLO? Etc. Stop sending foreign aid until and when our own finances are in order. • Pull back on being the “global police”. Our military spend is the equivalent of the next 20 countries combined. http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures http://www.globalissues.org/article/75/world-military-spending • Enact term limits so our politicians are not constantly running for re-election and instead looking out for everybody’s interests. • Enact a balanced budget Amendment. • Get serious with Tort reform. • Eliminate corporate and union lobbying.
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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