When I looked up sequestration in Merriam Webster, the closest meaning I could find to what is going on with the federal budget is
2a: a legal writ authorizing a sheriff or commissioner to take into custody the property of a defendant who is in contempt until the orders of a court are complied withb: a deposit whereby a neutral depositary agrees to hold property in litigation and to restore it to the party to whom it is adjudged to belong
What is the difference between the public debt and the deficit?
The deficit is the difference between the money Government takes in, called receipts, and what the Government spends, called outlays, each year. Receipts include the money the Government takes in from income, excise and social insurance taxes as well as fees and other income. Outlays include all Federal spending including social security and Medicare benefits along with all other spending ranging from medical research to interest payments on the debt. When there is a deficit, Treasury must borrow the money needed for the government to pay its bills.
We borrow the money by selling Treasury securities like T-bills, notes, Treasury Inflation-Protected securities and savings bonds to the public. Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (intragovernmental holdings) then become part of the total debt.
One way to think about the debt is as accumulated deficits.
So back when Bill Clinton balanced the budget, we did not run a deficit and did not accumulate more debt.
While some on the right would argue that Clinton really didn’t reduce the deficit and he ruined the economy by raising taxes, I seem to remember that things were going pretty well for the average person during the Clinton years.
When George W. came into office he said he wanted to give us taxpayers back our surplus which probably would have been OK if he hadn’t then started 2 wars which we didn’t raise taxes of any kind to pay for. No war bonds, no special tax assessment (used by state and local governments to pay for things), no general tax increase. Thus the red ink on the chart above. Then came what everyone is now calling the Great Recession. Barack Obama really had no choice but to spend money to get the economy moving again. We can argue about some of the spending – like saving some of the banks – but much of it work out pretty well, I think.
So now we have the sequester. This was a deal made in 2011 to keep everything from coming to a halt. I don’t think that anyone thought at the time that there wouldn’t be another budget deal to keep the cuts from going into effect, but so far no dice. The New York Times ran an editorial on Sunday which is the best explanation of what the cuts would mean that I have seen. For example:
NATIONAL SECURITY Two-week furloughs for most law-enforcement personnel will reduce Coast Guard operations, including drug interdictions and aid to navigation, by 25 percent. Cutbacks in Customs agents and airport security checkpoints will “substantially increase passenger wait times,” the Homeland Security Department said, creating delays of as much as an hour at busy airports. The Border Patrol will have to reduce work hours by the equivalent of 5,000 agents a year.
AIR TRAFFIC About 10 percent of the Federal Aviation Administration’s work force of 47,000 employees will be on furlough each day, including air traffic controllers, to meet a $600 million cut. The agency says it will be forced to reduce air traffic across the country, resulting in delays and disruptions, particularly at peak travel times.
CRIMINAL JUSTICE Every F.B.I. employee will be furloughed for nearly three weeks over the course of the year, the equivalent of 7,000 employees not working each day. The cut to the F.B.I. of $550 million will reduce the number of background checks on gun buyers that the bureau can perform, and reduce response times on cyberintrusion and counterterrorism investigations.
A three-week furlough of all food safety employees will produce a shortage of meat, poultry and eggs, pushing prices higher and harming restaurants and grocers. The Agriculture Department warns that public health could be affected by the inevitable black-market sales of uninspected food.
RECREATION National parks will have shorter hours, and some will have to close camping and hiking areas. Firefighting and law enforcement will be cut back.
DEFENSE PERSONNEL Enlisted personnel are exempt from sequester reductions this year, but furloughs lasting up to 22 days will be imposed for civilian employees, who do jobs like guarding military bases, handle budgets and teach the children of service members. More than 40 percent of those employees are veterans.
The military’s health insurance program, Tricare, could have a shortfall of up to $3 billion, which could lead to denial of elective medical care for retirees and dependents of active-duty service members.
And the list goes on.
The editorial concludes
Last week, Senate Democrats produced a much better plan to replace these cuts with a mix of new tax revenues and targeted reductions. About $55 billion would be raised by imposing a minimum tax on incomes of $1 million or more and ending some business deductions, while an equal amount of spending would be reduced from targeted cuts to defense and farm subsidies.
Republicans immediately rejected the idea; the Senate minority leader, Mitch McConnell, called it “a political stunt.” Their proposal is to eliminate the defense cuts and double the ones on the domestic side, heedless of the suffering that even the existing reductions will inflict. Their refusal to consider new revenues means that on March 1, Americans will begin learning how austerity really feels.
Remember the definition of sequestration I began with? It is a temporary thing. The money is supposed to come back to us. If the sequestration cuts really happen, I can bet you they won’t be temporary. We are reaping the cost of wars most of us didn’t want and any rational solution will be held up by the same folks who did want to go to war. We should have had war bonds.
- DOD to warn Hill about furloughs (politico.com)
- Obama pushes Congress to avoid forced spending cuts (cnn.com)
- Obama: Sequester Will Furlough FBI, ‘Let Criminals Go’ (cnsnews.com)