Fiscal Cliff Prediction - Sequestration - Mar 1, 2013
 

With pending Mar 1 around the corner with sequester and automatic cuts wanted to create another poll.

Lets just do the automatic cuts.

Why deal with anything now when you can push further down the road?

This time the sequester times with the debt ceiling and the end of the Continuing resolution, so.... were gonna have a big blowout. Im planning an unpaid vacation at the end of march.

The most logical answer is that the can gets further kicked down the road. That's how I voted approaching the previous cliff.

Now ... I'm not sure. There seems to be some serious fractions developing among the GOP. I'm not sure that anybody on the GOP wants to hand Obama a win, but I think the GOP leadership may want to deal another loss to the Tea Party. I should probably want to see what happens after the State of the Union, but right now I think there's a chance we get at least a medium-term resolution that's a lot closer to Obama's position than the GOP's.

I think this is Thelma & Louise option right? or kinda kick the can also?

Sequester State Of Play: Real Negotiation Won't Happen Until It Hits

See ya, science!

Are you a gov't contractor?

im a full fed.

T-2.

Thelma & Louise it is. Wonder how the markets will react or is it all built in already.

Sen. Rand Paul today unveiled the following plan to offset the anticipated layoffs of employees following the automatic spending cuts set to take place next month as a result of the sequester agreement. Below is a detailed look at cost-saving initiatives that, if implemented, would offset the impending sequester cuts, with a total savings of $85.75 billion annually.

The Sequester Without Layoffs

•· Stop Hiring New Federal Employees: $6.5 billion saved annually

•o Every year, thousands of federal employees retire or leave their jobs. In 2011, roughly 62,000 people ended their careers with the government. Estimates vary, but allowing a federal bureaucrat to retire without replacing that person with another employee can save anywhere from $60 billion to $200 billion over 10 years. This provision estimates to save $6.5 billion in one year.

•· Bring Federal Employee Pay in Line With Private Jobs: $32 billion saved annually

•o According to the Congressional Budget Office, the average compensation of a federal employees is 16 percent more than their private equivalents. By reducing salaries to align more with their private counterparts, this provision could save as much as $32 billion a year.

•· Reduce Federal Employee Travel by 25 Percent: $2.25 billion saved annually

•o The latest data provided by the General Services Administration suggested that the federal government spent $9 billion on travel. Reducing the federal travel budget by at least 25 percent can reduce the budget by $2.25 billion a year.

•· Focus Military Research on Military Needs: $6 billion saved annually

•o According to research done by the staff of Sen. Tom Coburn (R-Okla.), found that the Defense Department spent $6 billion on research that had nothing to do with military or military-related health inquires.

•· Require Competitive Bidding for Government Contracts: $19 billion saved annually

•o The Davis-Bacon prevailing wages law requires federal projects to pay the employees higher wages. This would repeal this requirement and allow the government to save money by making pay competitive to all government employees. The Heritage Foundation estimates that this will save $9 billion a year. Also, many contracts in the federal government are provided to companies without requiring a competitive bid - or the opportunity for the government to contract work at the lowest price possible. This provision would require the government to competitively bid all contracts. This provision would save an additional $10 billion a year.

•· Cut 50 Percent of Foreign Aid: $20 billion saved annually

•o We spend more than $40 billion a year on foreign aid. When we're dealing with a budget crisis here at home, it's only responsible to bring this money home. This provision would eliminate half the foreign aid budget.

Ok, let's look at Rand Paul's proposals...

Freeze Federal Hiring

I'm not one for blanket freezes, simply because they don't take into account who is retiring in what position. Key positions have to be filled regardless and the best candidate is not always one that is already employed by the Federal Government. However, I am more than willing to consider capping Federal hiring in some way. Of course, Federal employment is far less now than it was during the Regan area and so it's important to consider just how far we should cut and where. For instance, cutting IRS agents just results in a net loss to the government because of the reduced tax revenues. Areas like the National Park Service have been cut beyond the bone. Most people think the government has gotten bigger over the years. They're wrong. http://www.opm.gov/policy-data-overs...nt-since-1962/

Bring Federal Payroll in Line

Like most CBO studies, it's using numbers to reach a pre-determined conclusion. The GAO looked at 6 different public/private pay studies and found that there was no consensus as to who was paid more. http://www.gao.gov/assets/600/591817.pdf. In other words, the $32B savings here is unproven at best and absolute bunk at worst. Toss this one out. I'm not willing to cut employee salaries without proof they're too high. Furthermore, non-competitive salaries result in a brain-drain and that requires hiring more employees to perform the same tasks.

So if the CBO study is wrong (and that's very likely the case), all you're going to do is drive good people out of the government. And if you also have a Federal hiring freeze, then you're really creating a massive problem. It's a clever tactic to try to drive the size of the government down, but as I've already shown the government isn't large as compared to historical employee numbers.

Reduce Federal travel

I'm good with this, if the first thing to get cut are the travel work trips for Congress that are really nothing more than tax-paid vacations.

Military Research

Coburn didn't lay out specifics as far as I can tell, but I'm ok with this. In total his report identified $67B in military spending that should be cut, so I think we can find at least $6-$10B that is legitimate out of that. No need for US Army microbreweries.

Davis Bacon

I work with construction companies daily, so I'm very familiar with DB. Even the Heritage Foundation, that bastion of *cough* independent thought, shows less than $10B/yr that Davis Bacon supposedly costs. So where Rand gets $19B from is beyond me. Furthermore, there's no guarantee of savings from cutting Davis Bacon. Studies have shown that higher wages = higher productivity and that states that have cut Davis Bacon actually reduced the number of construction jobs in their states.

But I'm ok with cutting this Depression-era relic, even if the proposed savings are probably closer to 1/4th of what Rand Paul is claiming. However, you're going to find a lot of resistance on this one. Unions, obviously, will complain. But so will higher-income States. A state like NY or CA doesn't want low-cost workers from MS or AR working on construction projects in their state while local workers are unemployed. So between union states and higher-income states, this proposal - while probably a good idea - is probably DOA. The Republicans couldn't even get this passed when they had the House, Senate and White House for the same reason.

Cut Foreign Aid

Willy-nilly cuts in foreign aid may sound great, but those dollars are being spent for a reason. For example, $13B of that aid goes to Afghanistan. We made the mistake before of cutting aid to Afghanistan after a war and it cost us dearly - far more than $13B.

Yeah, we send $1B a year to Egypt for military aid and perhaps that can be cut. But are we going to cut economic aid to places like Kenya? Ethopia? Nigeraia? Sudan? If we do, let's be prepared to accept that means many more dying children in those countries. Want to cut the $500M to Columbia and Mexico? That means more drugs get moved into our country.

Sometimes the dollars spent in foreign aid aren't costs, but investments to stave off larger costs in the future. We didn't give much to Somalia for a number of years. It cost us something like $10B for the US-led UN action that also cost the lives of our soldiers. So is the $250m we're sending now a cost or is it more of a smart "insurance" policy?


In sum, even if we accept all of these provisions with all the negatives involved, Paul's proposals probably nets us about half of what he claims. Frankly, there are far better places to look for cuts. I'd be more than happy to cut the hell out of the TSA's $8B budget, eliminate some farm subsidies and use the goverment's buying power to negotiate drug prices for Medicare. Those would result in far more savings with far less risk and impact to most citizens.

My thoughts
Freeze Federal Hiring
The problem with this is, it would actually raise costs. whether or not what anyone does it worthwhile... someone believes it to be, and they will simply hire contractors (who cost more) to do the same job. you want to fix things? Title 5 reform is needed, now its almost impossible to fire fed employees.

Bring Federal Payroll in Line
Im 1000% percent behind this. my pay would go WAY up. Also the execuitive level pay is so far below market rates I dont know why people take the jobs (Ego isnt worth that much to me). Im in the situation now, where my boss, were he to leave, my work load would triple, and they would pay me essentially nothing more.

Reduce Federal travel

While I disagree with Blackadar about the vacation part...I do think about 10% of the travel we do is pretty wasteful. Im in disaster response, and we spent more money traveling people for Sandy that we did all last year, so there needs to be some flexibility. Whenever you do blanket anything... its a bad idea.

Military Research
sometimes the DoD is the best people to do the job... I would voice my previous objection to blanket cuts simply based on a cursory observation.


If we really want to fix the budget, but the hundreds of billions we spend on farm subsidies. cuts budget, and prices of food would go way down, increasing everyones spending power.

The problem is medical and defense spending. Everything else is trivial in the grand scheme.

the problem is social security.

we're talking a miniscule drop in the bucket of the budget..

Oh yeah, Fearless Leader decided he did not want the authority to choose which things got their funding cut.

good for him. Congress made this mess, congress refuses to deal with it. if he makes any decisions, then its HIS cuts. this keeps it firmly on the hill.

That is the job of the Legislative Branch, not the Executive Branch.

This is a mistake that a lot of people are making based on how the media is starting to spin the size of the cuts. It's a drop in the bucket of the overall budget. But it is a decent sized cut in the discretionary and military budgets.

While I generally dislike using analogies to household finances to try and understand the most complex economy in the world, I do think that one might work here.

Say I spend $1,800 a month on my mortgage/property taxes/insurance and put $1000 a month away in retirement and also spend $200 a month on groceries. And then I have to cut my grocery budget by $100. That's a 50% cut on groceries. But, you could also look at it and say that it's only $100 out of a $3000 budget.

Basically, you can have an opinion on whether the cuts are good or bad. But we are being a bit mislead when specific cuts to two areas of the budget (military and domestic) are seen as small when compared to the budget of the entitlements (which are immune from these cuts).

dola:

I am also starting to see a meme/spin from the right that I don't quite get. There's a "If the government can't handle these small cuts without reducing services, then there is a real problem with the government" argument starting to be put out there.

Am I crazy, or is that actually a criticism of the government for being too efficient? Are they really saying that the federal government should have 5% fat/waste in its budget that we could cut without noticing? Isn't a a good thing if the money spent is being used in a way that directly impacts our lives in a positive way (and that we would notice if it were gone)?

Say 10-15 years ago I spent $1,800 a month on my mortgage/property taxes/insurance and put $1000 a month away in retirement and also spent $200 a month on groceries. Now I spend $3600 a month my mortgage/property taxes/ put $2000 away in retirement and spend $400 a month on groceries. I have had plenty of opportunity to figure out a better method for paying for these groceiries or cutting back on the stuff whose costs are going out of control. Instead of doing that I have made a series of last minute decisions to push this decision down the road. Now here I stand Feb 28. You really want me to cut $100 out of my grocery budget? Are you mad?

SS can be fixed with a few minor adjustments. Medical spending is the biggest driver of long-term debt.

Preaching to the choir here. Congress has been kicking this can down the road for decades. When times are bad, we have to cut taxes to "stimulate the economy." When times are good, we have to cut taxes because "It's yer money." And if anyone tries to touch entitlements, its nothing but Mediscare tactics from the other side. As a result, taxes are too low, and entitlement spending is too high. (As a side note, as much as I blame Congress, they have a pretty good argument that they have simply been giving us what we want (low taxes and lots of entitlements) for the past 30 years. Probably a discussion for another thread.).

My point wasn't whether the sequester was good or bad. Simply that the people trying to convince us that the sequester is a tiny fraction of the budget are adding things to the denominator of that fraction that should not be there.

The sequester was obama's idea.. He signed the legislation. he didn't have to. Don't absolve him of responsiblity..

oh wait.. Blame Bush!

Your kidding right? he didnt write the legislation, congress did that. You can say many bad things about Obama.... but this is all congress.

I one the things I enjoy about FOFC is that it is above the yahoo message board's Bush vs. Obama stuff. I think this is one area that we agree seems to be the product of both parties being completely worthless and too scared to piss off any voters.

FTW

i think you nailed it on the head here... its our system of elections that is the problem. due to gerrymandering there is something like 19 (I saw this on CNN) congresspeople who will go home to districts that did not vote either party in the presidential election. most congresspeople arent worried about voters voting for the other party, they are worried about internal challengers, and those are usually more extreme (this is due to money, only people with extreme views give money). the US needs demographers to do the congressional districts, not politicians!

Even better, let Math do it: http://rangevoting.org/SplitLR.html

There's no real leadership or sincerity and the motivations are all political and about maintaining or regaining power. The sequestration is just a political opportunity, a chance to blame Obama for a bad situation, or a chance to prove how devastating any cut to government spending is. I don't know how we can get better people into politics. The sincere people committed to public service can't rise up in the ranks (though a lot of them do great things in our local communities). You have to sell your soul to have broader success in either party. Too cynical?

If Obama called the cuts "dumb, arbitrary", then why the &"$/@ didn't the leadership make cuts that were smart and purposeful? Saying that there can't be any cuts is completely stupid and deceptive and totally false. He knows there can be lots of cuts but he doesn't have the guts to make them, not to mention that it goes against the grain of growing the government. Instead we get a blame game.

claphamsa covered that above.


It's not his job to propose spending cuts, it's Congresses' job.

Because it was designed to be so bad that both sides would compromise on something better. That isn't happening.

Ladies and Gentleman your United States government in action!

Those idiot Libertarians that oppose genius ideas like cuts that are purposely designed to be so bad that both sides will compromise. Why would anyone want a smaller government with brilliant ideas like this coming from Washington?

What is presently happening now is the 'court of public opinion' ... both sides will blame the other, if one seems to lose public opinion from their faithful then they'll eventually cave and give in slightly more than the other.

However if both sides camps remain convinced the other is the party in the wrong there is no incentive to deal and the cuts will remain in place until something really shitty hits the fan ....

March 27, when the government will shut down without a resolution to keep funding it.

Again the third parties are "wack jobs". Nobody should vote for them. Instead they should continue to vote for the D/R's that will purposely use real American's jobs and livelehoods in their game of chess to see who will blink first. Glad we don't have any Green party or Libertarians who might actually make cuts to the "pork".

I have already planned my vacation.

We need good 3rd parties. Not ones that are out of touch with reality.

We actually have a trip planned to D.C. for the weekend after that. Going to have to watch it closely. No sense in taking a 5 y/o and a 2 y/o boy on vacation if both the plane museum AND the dinosaur museum are going to be closed.

Oh, and, yeah, I would probably have to stop coming to work and getting paid. Which is probably another good reason to cancel a vacation.

People still use Yahoo's message boards?

You are correct the parties I mentioned aren't in touch with the reality of DC. Massive corruption, beholden only to the highest bidder, and never finding a war that didn't love to send other people's children to die in. Reality.

Pork is generally preferable to their own brand of insanity.

And the Libertarians are different? Libertarian hero Ron Paul loves pork as much as the next guy. Loaded up on it each cycle and earmarked a bunch of shit he claims to be against.

I get that there is this fantasy world where Libertarians live in where dramatically reducing government makes the country great. Because we all know it's done well for shitholes like Somalia. That people don't want safety nets or organizations in place to protect them. A country where infrastructure doesn't exist (again, check out how that's going for Africa).

Not liking the current crop of politicians is fine. Thinking they should work better together or come up with better ideas. But your stance is that since things aren't going great, we should abandon it all and put in some retarded extremist who couldn't pass a high school economics course.

I don't think Libertarians support a Somali-style "government". They are also not anti-public roads. Though this is one of the more amusing internet message board political things that people cling too. There's members of both major parties who have libertarian leanings. There's moderate libertarians and extreme libertarians, just like any other view. It's not the same thing as anarchy. They don't want to eliminate the government. They're just going to lean on the side of more personal social and economic freedom in most mainstream political debates. If by some miracle the Libertarian party (or a new 3rd party with Libertarian leanings) in the U.S. gained actual influence, it would be a pretty moderate party, because to have that kind of gain in numbers, they'd necessarily have to bring on a lot of former Democrats and Republicans. It's silly to judge Libertarians by the current incarnation of the "libertarian party" because it only has like 10 people in it, so by definition it's going to be very extreme, because if they weren't extreme, their members might as well just be Democrats or Republicans.

Pretty weak from an informed person like yourself. The Somalia rhetoric is about as accurate a portrayal as Obama making us Red China or Cuba or George Bush making us Nazi Germany. You would laugh at an argument like those but then present the classic no roads/anarchy argument for Libertarians. Look up Gary Johnson and New Mexico and that's what I am aiming for. Will Jon like it? Probably not. Will you? Probably not either, but actually argue his policies and views instead of sticking with the "they don't want roads!" nonsense. As to your last jab about not understanding economics. Please do tell how printing trillions of dollars and borrowing money from China fits in economics 101. Is that in the supply or demand chapter?

In your world of Thailand style punishment we could hold off this sequestration with another upset in college basketball. 2000 students rush the court at a $250,000 fine each and we will get there within a basketball season. :)

Hmm ... A Duke losing streak could balance the budget. It's a win-win really.

I would compare the Libertarian utopia to something, but being Libertarian means you just have to talk in vague platitudes. "Stop spending so much" and "maintain liberty" are cute catch phrases, but they don't have any meat to it. Here's some examples. Talk about how we'll still fund a defense, still protect the borders, still have roads, bridges, dams, and all that fun stuff. Yet the Libertarian Party states in their platform that they want to eliminate income tax and abolish the IRS. Where is this money going to come from?

And lets talk New Mexico. This is a state that receives over $2 for every $1 their citizens pay in to the federal government. It's easy to maintain things when you're leeching off other states. Didn't see Gary Johnson turning down those excess tax dollars that his citizens didn't contribute. I'll take the argument that you take in what your people paid in, but he didn't need to take welfare.

Who monitors the air without the FAA? Who finds the source of a salmonella outbreak that is killing people without the CDC? Who makes sure the drug your taking won't give you cancer in 5 years without the FDA? I suppose each one of those 50 states can create and maintain their own, although that seems incredibly inefficient and a huge waste of money.

You mock the Somalia comparison, but why is it so far off? Your Libertarian Party wants to do away with all public schools. How many more uneducated people does that equate to? How long until that lowers the overall quality of everyone's life? What happens when one company has a monopoly on a major utility and prices most people out? If you think those things bode well for our long term prosperity, think again. When you let a large portion of your country become uneducated and unable to access basic essentials in a modern world, you become a 3rd world country.

Why wouldn't America become like all the other small government countries in the world? Why would we be the exception to the rule?

T-0

Stock market was okay. I guess it was factored in.

(7 of us called it!)