Sequester Threatens Most Efficient Government in History

On Friday, barring some last-minute, extraordinary action by Congress, the government's sequestration takes effect. The sequester, approved during the debt ceiling talks in 2011, would require the federal government to trim about 1% of its spending over the next seven months. For the past week, the Obama Administration has been spinning nightmare scenarios about the effects of the cuts. Apparently, the federal government is so amazingly efficient that the last 1% of spending is critical to its basic functions. 

Obama has warned that, among other dire consequences, the FBI will have to let criminals go free. Tens of thousands of teachers, funded primarily by state and local funds, will be lose their jobs. National parks everywhere will close. First-responders will be laid off. The government will have to cut back on food and safety inspections. Thousands of people will lose benefits, student loans, health coverage and food stamps. Flights will be cut and airport delays will increase considerably. 

Democrat HI Governor Neil Abercrombie has warned that the sequester will make Pearl Harbor vulnerable to another attack. Seriously. 

Not to put too technical a term on it, but this is hogwash. As Larry Kudlow helpfully reminds us, the actual cuts to spending are half the $85 Billion cited by the press. The CBO notes that the $85 Billion in cuts is from budget authority, the ceiling on spending within that category that Congress has approved be spent, usually over a few years. 

The cut to actual budget outlays, the actual spending done within the fiscal year, is half this amount, around $40 billion. This amount is just over 1% of the total federal budget. Even with these cuts, the federal government will still be spending more on everything than it did just last year. I somehow missed the Dickensian nightmare that engulfed our society last year. 

The whole sequester debate points out three problems with our ability to address our fiscal crisis. First, the cuts are all on the discretionary side of the government's ledger. Discretionary spending is just over a third of the total federal budget. Most of our spending is on entitlements, essentially just transfer payments to people. Until we address that, there is no way to meaningfully bring down the deficit or national debt. 

Second, the federal government is approaching the sequester as if it is simply a temporary measure and assumes the money will eventually be returned. As a result, we have lay offs and furloughs, rather than permanently right-sizing the federal workforce to match the productivity found in every other part of the economy. 

More fundamentally, though, we are still avoiding a discussion of which functions the federal government should be doing in the first place. Transportation Secretary Ray LaHood, the Administration's chief Cassandra, warned that the FAA would have to temporarily shut down more than 100 control towers at airports throughout the country as a result of the cuts. 

One of the airports listed was Boca Rotan, Florida, which caught my eye because I was recently in that area. Boca Rotan is less than a 30 minute drive from two major airports, West Palm Beach and Ft. Lauderdale. It turns out the Boca Rotan airport is owned by the State of Florida and is a general aviation airport, meaning it's used for private planes. Why is the FAA even paying for flight control at an airport owned by a state government and used exclusively by private plane owners? If ever there was a case to privatize flight control, as Canada has, surely it's with respect to these airports.

The nightmare scenarios swirling around the sequester show that we're fundamentally not serious about the budget. If we start with the premise that our government is so efficient that a smaller increase in spending than planned causes a breakdown in government's basic functions, then we had better get used to decades of deficits. 

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