Keeping Sequestration in Long-Term Perspective

Feb. 26, 2013
We have to face the choice of accepting spending cuts now or later. The difficulties will only be greater if we delay.

The March 1 sequestration deadline is upon us. The rhetoric out of Washington is increasing, and so is the scare factor. We are being told that planes will face massive delays, park rangers will be hard to find, meat plants will go uninspected, and all manner of calamity is upon us. I thought some perspective might be helpful.

The news report is that $85 billion of “cuts” are required under sequestration and that this will cause all kinds of economic and social chaos. In reality, the actual cuts are about $60 billion plus or minus because the $85 billion is off the increased 2013 estimated budget. Add to the 2012 budget and then subtract and then you have a Washington cut. 

$60 billion in potential reduction in budgets in a federal government with a budget of approximately $3.7 trillion (there is not real budget so you can’t be sure). The cuts amount to 1.6% of the total.  If you prefer, the cuts would come to about 6.6% of the projected 2013 deficit. 

How many families and businesses have had to cut 1.6% of their costs in the last five years and yet somehow continue to function, or in the case of businesses, still deliver quality goods and services seamlessly to the customer? Either we embrace this very mild austerity now and each year over the next nine years or we will be forced to live with much more austerity-led cuts in the next decade.

About the Author

Alan Beaulieu Blog | President

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and 60 years of correct calls. In his keynotes, Alan delivers clear, comprehensive action plans and tools for capitalizing on business cycle fluctuations and outperforming your competition--whether the economy is moving up, down, or in a recession.

Since 1990, he has been consulting with companies throughout the US, Europe, and Asia on how to forecast, plan, and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to NAW, Contributing Editor for INDUSTRYWEEK, and the Chief Economist for HARDI.

Alan is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. 

Prior to joining ITR Economics, Alan was a principal in a steel fabrication company and also in a software development company.

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