One week from today, if Congress does nothing to stop it, a giant budget knife called the sequester will slice through the federal bureaucracy.
The sequester — an awful, verb-as-noun word that means to set aside or confiscate — means automatic cuts of 9.4 percent in military spending and 8.2 percent in non-defense, discretionary programs. It’s intended to reduce federal spending by $85 billion this year and $1.2 trillion over 10 years.
That’s a noble goal, but the sequester is a terrible way to get there. It doesn’t eliminate a single wasteful program, and it treats essential functions like air-traffic control and meat inspection just as harshly as farm subsidies and other special-interest handouts.
Wielding the budget ax in such a sudden, indiscriminate fashion would damage an already weak economy. Macroeconomic Advisers, based in Clayton, estimates that the automatic cuts would reduce gross domestic product growth by 0.6 percentage point this year and would cost the nation 700,000 jobs by 2014.
“It’s not a macroeconomic catastrophe in the way going over the fiscal cliff would have been, but it is coming at a time when the economy is struggling to recover from the Great Recession,” says Joel Prakken, Macroeconomic Advisers’ chairman. “It is coming on the heels of a $200 billion tax increase, and it comes at a time when the Federal Reserve faces constraints on its ability to use conventional monetary policy.”
Prakken adds that the sequester “can’t possibly be sensible microeconomic policy, because the cuts aren’t thought out.”
Presumably neither political party wants to shut down meat and poultry plants, but that would be the effect if the Agriculture Department has to furlough meat inspectors. Nor, presumably, do Democrats and Republicans want to lengthen the security lines at airports, but that would happen if Transportation Security Administration employees are furloughed.
The St. Louis area, by the way, has a lot to lose in this fight. Largely because of Boeing’s defense operations here, federal spending fuels 7.6 percent of Missouri’s economy, the seventh-highest exposure among the 50 states.
“Percentage cuts across the board are not a very sensible or effective way of dealing with budget issues,” says Murray Weidenbaum, a professor of economics at Washington University. “They penalize tight ships, well-run agencies, while those that have a lot of soft stuff in their budgets aren’t hurt as much. Real serious budget cutting means examining priorities, eliminating some programs and reducing the scope of others.”
To be sure, the sequester’s full effect wouldn’t be felt immediately. Unionized employees, for instance, have to get 30 days’ notice of a furlough. So if the sequester starts March 1, Congress could reverse it a few days later by finding more sensible places to cut.
Some Republicans seem to think that’s their best strategy. They assume that a public outcry will bring Democrats — who so far are talking mostly about tax increases to reduce the deficit — to the table to talk about spending.
It’s never a good idea, however, to pursue a strategy that you aren’t willing to carry out. And the sequester would have disastrous consequences if we carry it out.
Democrats, meanwhile, seem to think — or hope — that the public will blame Republicans for those consequences, even though President Barack Obama’s leadership has been sorely lacking on the issue of spending cuts. Both sides are playing a giant game of chicken, and we all stand to lose.