Washington, DC, February 12, 2013 --  

Automatic budget cuts are only a small measure of what is needed to put America's house in order. Those opposing them do so against their country's best interests.

A looming deadline for automatic cuts in America's budget has government spending advocates coming out of the woodwork to demand the "sequester" be stopped.

Senator Barbara Mukulski says the impacts would be "devastating to the American people,"¹ while Senator Chuck Shumer calls them "insane" and "unacceptable".² A White House fact sheet reads like a laundry list of imminent calamities, describing furloughed FBI agents and federal prosecutors letting crime run rampant, while absent food safety and workplace inspectors put Americans' health at risk.³

But it is not just the domestic impact that has opponents in a frothy rage. Half the cuts will come from the Pentagon, which Defense Secretary Leon Panetta calls a "doomsday scenario" that would make America a "second rate power"⁴. His Republican colleague Senator John McCain, staunchly opposed to both tax hikes and military cuts, said he would discuss tax increases to stave them off.

Is this outrage justified? The law that created the sequester requires $120 billion in yearly savings spread evenly over the next decade. This year's share covers seven months from its effective date on March 1 to the end of the fiscal year end in October. This leaves $70 billion in cuts, half from the Pentagon and half from non-entitlement domestic programs.

A $35 billion defense cut sounds big. But it is only 5 percent of last year's $688 billion⁵ defense budget. Of this money, $107 billion is the cost of the war Afghanistan,⁶ so subtract that and you get a non-war Pentagon budget of $581 billion. This is higher than at any time since World War II. Even at the peak of Cold War spending in 1989, the Pentagon only got $552 billion in 2012 inflation-adjusted dollars. ^7,8

A $35 billion cut would bring the non-war Pentagon budget down to the same level (adjusted for inflation) as in 1984-85 when Ronald Reagan's massive military buildup was bankrupting the Soviet Union. ⁹ How can Panetta honestly say returning to Pentagon budgets from the Reagan defense buildup is a "doomsday scenario" that would make America's military second rate? The statement is simply laughable.

Clearly, the sequester rhetoric is out of control -- but not nearly as out of control as America's spending.

America's federal government has blown over $1 trillion dollars more than its income for every one of the last four years. Its deficit is projected to drop below $1 trillion this year largely because of the sequester cuts.¹⁰ The annual cuts amount to about 13 percent of the non-sequester deficit. If America were to actually balance its budget, it would need cuts seven times larger. People kvetching about these small cuts need to face reality.

This truth of this is so simple and obvious it is hard to believe that opponents are intellectually honest when they say:

• Cuts are needed, but they should be targeted instead of applied across the board like in the sequester.

Perhaps so, but for several years, Congress and the President have repeatedly proven that they cannot make the kind of compromises needed for a deal.

• Cuts are needed, but the economy is too weak to withstand them now. Put them off until later.

Two problems here. First, unemployment recently dropped below 8 percent and annual economic growth has been positive for over two years. So the economy is clearly on a sound footing. Second, America's deficit addiction has persisted in both good times in bad. Just as one would not trust a drug addict to give up his habit "when things get better," so is the case with politicians and the budget.

• Instead of cutting spending, raise taxes on the rich.

Raising taxes is an option, but wealthy Americans simply don't make enough money to close a $1 trillion budget hole. To get that kind of money, you have to go deep into the pockets of American's large middle class. No politicians support this -- it's political suicide.

• There is nothing wrong with deficit spending. Deficit spending is a useful tool that can create a brighter future.

This is true only in the short-term and only when spending is specifically targeted to generate future returns. The government has run deficits almost all of the last 40 years, almost never for anything bringing a return. Most spending currently goes to fund the retirements of the elderly and the salaries of government bureaucrats and soldiers, the vast majority of whom are nowhere near a battlefield. It's hard to imagine worse investments.

Any way you look at it, the status quo is indefensible. Younger Americans will suffer dearly for the debts run up by their elders, through high taxes, low government benefits, high inflation, or all of the above. Continuing to rack up large debts is nothing short of immoral.

Indeed, the real "doomsday scenario" for America is not the sequester. It is the threat of politicians who continually block or delay its implementation without other cuts of equivalent size. If there is any problem with the size of the cuts in the sequester it is not that they are too big. It is that they are several times too small to put America's house in order.

Related Web Columns:

Welcome to Reality, Glad You Could Join Us, August 9, 2011 /welcome-to-reality-glad-you-could-join-us.html

Time For What Doesn't Feel Good, July 12, 2011

None Too Impressive, April 15, 2011

Living Like There's No Tomorrow, November 9, 2010

Smarter Than a Spendthrift, August 2, 2009

The Rise of the Mutant Beast, January 13, 2009

Yawning Toward Disaster, September 2, 2008

Mugged by Grandma, July 8, 2003

Notes:

1. Baltimore Sun, Cardin asks NIH researchers to help fight looming cuts, February 9, 2013

2. The Atlantic, Why Immigration-Reform Advocates Feel Good About Their Chances, February 7, 2013

3. White House, Fact Sheet: Examples of How the Sequester Would Impact Middle Class Families, Jobs and Economic Security, February 8, 2013

4. Washington Post, Panetta fighting to the end against proposed defense spending cuts, February 9, 2013

5. Office of Management and Budget, Table 3.2—OUTLAYS BY FUNCTION AND SUBFUNCTION: 1962–2017, as Posted February 10, 2013

6. Ibid, The Budget for Fiscal Year 2012, Overseas Contingency Operations, March 2012

7. Office of Management and Budget, Table 3.2—OUTLAYS BY FUNCTION AND SUBFUNCTION: 1962–2017, as Posted February 10, 2013

8. Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers - (CPI-U), January 16, 2013

9. Non-war 2012 military spending less sequester cuts is 552 billion - 35 billion = 517 billion. 1984 military spending was $221 billion in 1984 dollars which is $285 billion x (226.6/101.9) = $491 billion in 2012 dollars.

10. Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, February 5, 2013