THE BUDGET CUTS NEED TO BE BALANCED OR THEY WILL NOT WORK

THE BUDGET CUTS NEED TO BE BALANCED OR THEY WILL NOT WORK

Matt HealeyThursday,7 February 2013

The Snap:

Budget cuts are coming. This much is known. The only questions that remain are how big and to what departments. If nothing is done the sequestration will happen and the cuts will be across the board.

The Download:

As part of the fiscal cliff deal (drinking), the sequester cuts were postponed until March 1st. These are a series of automatic spending cuts that will hit almost every government department. Personally, I am not sure that having them go into effect would be such a bad thing. Government spending is too high relative to our GDP. Currently it stands at approx 35%. It had been trending up since 2000 and then increased dramatically in late 2008, due to the economic contraction that started late in W’s second term. It has come down slightly since then as the economy has begun to recover. But there is still more work to be done.

Current thinking is that we need to avoid the sequester as these cuts are across the board, and thus are not an optimal way of reducing government spending. This is code for “The sequester cuts things that I like or that will benefit my district. So we must change the budget cuts.” The problem with this approach is that for the budget cuts to work and to be able to be passed through both houses of congress, they need to hurt everyone the same. That means the Democrats will need to accept cuts to social programs and the GOP will need to accept cuts to defense. If the discussion goes like this “The budget must be cut or the country will end up like Greece, so we have to cut only things that I don’t like,” then it will go nowhere. I hope that in the discussion Congress grows up to the point that they understand this. I am not optimistic, however, based on the comments from both sides of the aisle.

Hat Tips:

Fiscal CliffSize of Government, GOP on defense cuts, Democrats on entitlement cuts, Image Credit: Wikimedia Commons

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  1. […] sequester will happen on March 1st. unless something is done about it. As I have written in previous posts, I am not sure that having the sequester go into effect is such a bad thing. Government spending is […]

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