By Danny Zeng | February 28th, 2013
Only in Washington, New York Times, and academia will you hear the term “austerity” used to demagogue the current round of automatic spending cuts scheduled for this Friday, March 1st, which by the way, is the doing of the very congressional men and women who manufactured this crisis in the first place. The media and the President have been staging daily segments to draw attention to the “crippling” effect of the so-called sequester (again wonkish jargon for “cuts”).
Now, is this bad policy? Absolutely. This was the unthinkable mechanism that Congress came up with to force deficit reduction back in 2011. What’s happening is the same people in Congress decided to play with fire then, burnt their fingers in the process, and now they are screaming for ice – or more like for Aloe Vera from the rich, depending on your view.
Average Americans who are mentally drained from the last congressional debacle over the fiscal cliff don’t seem to care as much this time, and I don’t blame them. Why should they invest time after time in the legislative dysfunction that is often self-induced? The President in recent days has pulled a classic play from his book by going on the air promoting a “balanced” approach of raising taxes on the rich while reducing spending cuts. This is a dishonest way to deal with this issue on several grounds.
- First of all, by now, when the President utters the word “balanced,” I perch my ears up to listen for specifics. The President is dubiously trying to sell his revenue hike as a “comprehensive tax reform” by closing tax loopholes on the wealthy– sure, but “comprehensive” would also mean lowering marginal rates for everyone to stimulate growth, which is not part of the President’s plan. His plan really comes down to more taxes on the rich on top of the already imposed taxes on the well-do from the fiscal cliff deal in January. Balanced much? Or class warfare?
- The actual sequester amounts to about 1-2.4% of the $3+ trillion federal budget, depending on if we use the Congressional Budget Office estimate of $44 billion effective cuts this year versus the often cited $85 billion. To put this into perspective, annual cost of attendance at UT Austin amounts to about $26,000.The “sequester” that would apply to an average student would amount to $260-600 annually; divide this number by 12 into monthly units, the cuts amount to $21.67-50. This would mean more spaghetti instead of salmon for dinners (which obviously threatens our nutritional outlook), loose-leaf versus hardcover textbooks (which obviously threatens our educational needs), jogging in the park for free instead of having a gym membership (which obviously undermines our health), or perhaps just working a few hours less (which obviously threatens job prospect). This is a crude analogy, but I think it is pertinent to the fact: the sequester, while it does have consequences, is a tiny, flexible component of our larger addiction to spending.
- The main drivers of our spending problem are still the Big Three – Medicare, Medicaid, Social Security, which together consume about 60% of our federal budget, and none of which will be touched under the President’s plan to replace sequestration. A truly “balanced” approach would put entitlement reforms on the table. The often-touted Simpson-Bowles definitely tackles entitlements in their effort to tackle our structural deficit.
For these reasons, Republicans are right to hold their feet to the ground against another one of the President’s tax-the-rich scheme. While the sequester could inflict some short-term pains, it will put us on a more sustainable long-term fiscal path toward growth and opportunities, along with genuine tax reform presumably later this year. The politics is difficult, but the choices are clear. Since our elected officials have so meticulously made the bed for this political theatrics, I suggest for them to just lay in it and ponder the concept of leadership. The fact is that the “super-committee” had failed, and Congress kicked the can further down the road in January. Now we are at the end of the road. Actions have consequences. It’s about time that our country enters a fiscal awakening.