Myths from D.C. Part 6 – “Sequestration is a drastic spending cut.”

February 06, 2013

By Jason Hughey

In 2011, Congress passed the Budget Control Act (BCA).  This legislation raised the debt ceiling by $2.4 trillion and only one and a half years later, the federal government has already spent all of that $2.4 trillion and more.

The legislation also included some “spending cuts” according to many commentators on the bill.  The goal was to set up a bipartisan committee that would find $1.2 trillion worth of spending cuts over the next ten years.  If that committee couldn’t agree on its own package of spending cuts, an automatic set of spending cuts (totaling $1.2 trillion over ten years) would go into effect.  These cuts would equally affect both security and non-security spending. They are what everyone refers to now as “sequestration.”

Of course, as usual, Congress couldn’t come to an agreement regarding which $1.2 trillion to cut over the next ten years.  Therefore, Congress was supposed to allow $109 billion in sequestration cuts take effect on January 1, 2013.  However, when Congress passed the poorly named American Tax Relief Act, they also delayed sequestration until March 1 of this year and reduced the overall amount of sequestration by $24 billion.

However, few politicians are posing much of a challenge to the arrival of the rest of sequestration on March 1.  Thus, the automatic cuts will likely go into effect, cutting roughly $85 billion from federal spending.

You read that right: $85 billion.  Now isn’t that a lot of money?  Isn’t that a dramatic and draconian spending cut as some supporters of big government would like us to believe?

It is widely understood that most people have a “Big Numbers Problem,” which means that they lose a proper perspective of scale when they hear about large numbers.  This is exactly what proponents of government spending want to happen when they complain that $85 billion (or $109 billion) is a dramatic spending cut.

In reality, $85 billion is merely 2.4% of the projected $3.5 trillion federal budget for 2013.  Of course it sounds like a big number to a regular person, but in the context of federal spending, it’s milk money.  Furthermore, the sequestration “cuts” are not even cuts at all over the long-term. Spending will continue to rise in the next decade even after sequestration takes effect over the next ten years.  Don’t believe me?  Take a look at this chart:

Notice the trend line in the chart.  Spending over the next ten years continues to rise, regardless of which scenario you choose.  This is why it’s rather dishonest to even refer to sequestration as a cut to federal spending since federal spending will continue to grow, from a roughly $3.5 trillion total this year to a $5.3 trillion total in 2021.  It is more accurate to say that sequestration slightly slows the growth of government spending.

That said, as minuscule an affect as sequestration will have on the federal budget from a numbers perspective, it’s still better than allowing federal spending to grow even faster than it would without sequestration.

The good news is that it is pretty likely that sequestration will be allowed to fully kick in on March 1.  But at the same time, it’s important to remember that when defenders of big government worry about the “massive” sequestration cuts, they are really only referring to very tiny decreases in the rate at which federal spending continues.  Sequestration is only a tiny step in the right direction in curbing the federal government’s outrageous spending.  Major reductions in federal spending are still necessary in order to truly shrink the size of government.

To see previous posts in this series, click below:
Myths from D.C. Part 1: “We just need more revenue.”
Myths from D.C. Part 2: “The rich need to pay their fair share.”
Myths from D.C. Part 3: “The President’s plan has savings from the wars.”
Myths from D.C. Part 4: “Social Security doesn’t add to the deficit.”
Myths from D.C. Part 5: “The President is Protecting the Middle Class.”

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