The Sequester Spin! Doomsday, Deliverance or More Dialogue?

by Lear Capital EditorialFebruary 27, 2013

All the talking points, hype and buildup about Sequestration are at once sobering and fascinating. The White House tells us that America will be fundamentally changed come Friday morning. We are hearing about possible furloughs for teachers and first responders, massive job losses, release of illegal detainees at the border, less airport security, fewer vaccinations, and even a marked disruption in unemployment benefits.

Others claim that the coming cuts are not all that severe ... a mere drop in the bucket in the massive storm surge of American debt. The average US citizen seems to be taking a "wait and see" approach since we have all become accustomed to last minute Congressional deals and twelfth hour bipartisan reprieves. The reality is that it may be too early to tell precisely what will be impacted and the degree to which it will be felt ... if sequestration does take effect at 12 AM ET on Friday.

One thing is for certain, a cloud of oratory, rhetoric, and party-speak is currently dominating the airways ... and none of it is providing much clarity.

Here are the facts. Sequestration does not cut federal spending at all. It simply slows its growth by $85 billion dollars. That is BILLIONS in our new world of TRILLIONS! This represents a less than 2.3% overall budget reduction ... only $44 billion of which will actually take effect this year. So we are only really reducing the government's spending spree by a meager 1.2% in 2013. Notice that I said "reduce spending" because even with "the sequester" the government will continue to spend more of our money this year, next year and every foreseeable year. Washington still has a massive national credit card, only with a slightly lower spending limit.

Let's not forget that "the sequester" is the Federal Government's self-imposed ultimatum for failing to do America's budgetary business. It was part of the January Fiscal Cliff compromise and everyone in Washington knew it was coming. But, instead of working out judicious and rational spending reductions, lawmakers have chosen a punishing path of tough, arbitrary cuts. The indiscriminate budget slashing was purposely designed to impact the military and social programs making it particularly unattractive to both parties. While this does not quite meet the apocalyptic admonitions coming out of Washington, there are clearly better ways to get our house in order than automatic spending cuts.

The forced "sequestering" of funds says much about our commitment to solvency as a country. We face significant financial woes that require tough decision-making. The continued indifference, inaction and inability of our government to control spending and reduce our national debt has undermined America's leadership role around the globe and diminished the hope of prosperity for generations of Americans to come.

Everyone agrees that a random hacking of domestic and defense dollars is not an ideal way to balance America's books and conduct her business, but with the Debt Clock just surpassing $16.6 trillion could it perhaps be the only way to force a dialogue? On Friday March 27th the government runs out of money ... again. If "the sequester" sets the table for serious and thoughtful discussions about our ever-rising deficits, another potential government shut down, and the next debt ceiling deadline coming in May ... then it may be an unlikely step toward salvation.

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