Four Things to Know About the Next Big Budget Battle

Now that the sequester is working its way into effect, the next act of our fiscal follies takes place March 27, when the federal government will sort of shut down (it takes quite awhile to fully shut down)  if congress doesn’t act to continue to fund it.   They can avoid a shut down by passing a continuing resolution (CR), which will fund the government for another stop gap period. CR’s are a regular part of the way they operate, as there are parts of each budget that they continue to rangle over until finally funding them.

English: Al Gore and Newt Gingrich applaud to ...

English: Al Gore and Newt Gingrich applaud to US president Clinton waves during the State of the Union address in 1997. (Photo credit: Wikipedia)

A failure to refund everything at once is unusual, though it happened under President Clinton back in 1995.  The two parties could not come to an agreement about continued funding, so the government “shut down” for a few weeks.  That is unlikely to happen this time around seemingly due to what has been called “fiscal fatigue”.  Congress seems as tired of these budget battles as most of us.  Not so tired as to really fix anything, but tired enough to take a little break.

The CR ties to the sequester in that in developing a continuing resolution, both houses are also talking about making sequester  cuts more flexible, with the Republicans most interested in doing that with the defense spending and the Democrats with the social programs.   I imagine they will refund a number of the cuts as well, so it will take awhile to see what has really been cut.

All of that together isn’t going to have much impact on solving our deficit and overall debt problems, but it will keep  our creaking ship of state above water for the time being and allow me to concentrate on the other form of March Madness.

By the way, I unashamedly stole the title for this post from a fuller explanation by Ailsa Chang of NPR,    The link connects to an audio that takes less than four minutes, while there is also a written version for the hard of hearing.   She adds much clarity to my thumb nail version.

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Perhaps the Sequester Isn’t All Bad

What do former Vermont governor, full fledged liberal Howard Dean and the Tea Party have in common?   They both welcome the sequester.   The Tea Party because any cut in government spending is a good cut,  and Dean because while “tough on things that I care about a lot…  the fact of the matter is, you are not going to get another chance to cut the defense budget in the way that it needs to be cut.”

Certainly Dean’s opinion is not the common liberal view, which is more along the lines of the sky is falling, with the President publicizing details of various losses  and the pain and reduced safety they will cause (*1).  What makes this all murky is that much  of the money cut could be refunded or the cuts be delayed for years to come.

While Dean and the Tea Party make for strange bedfellows, the gathering looks odder still when some like minded military experts are included.  On Feb 22, retired Adm. Gary Roughead and some others with strong military credentials gathered for a discussion of military spending at the Brookings Institute Feb 22.   Not that they favor these across the board cuts, but as Roughead stated:  “the Defense Department could absorb the pending $500 billion sequester reduction in planned Pentagon spending over the next 10 years if it had ‘the latitude to rebalance its own spending.’ ”

English: Graph of the global military spending

English: Global military spending from several years ago, but relative comparison remains roughly the same. (Photo credit: Wikipedia)

Somewhere between 18 and 24% of our federal budget goes for military spending (depending on how a given chart breaks it down), so the idea that the sequester cuts will weaken our defense is mostly a matter of their heavy handed nature.   Of course, wiser cuts might be “politically incorrect”.   As Roughead noted, “It is a matter of public record, many times over, that the military infrastructure [bases, air fields etc.] exceeds need,” but Congress has balked at closing facilities.”  Apparently government waste is money spent in congressional districts other than ones’ own.

Another aspect is when talking about military spending, the underlying issue is what we expect our military to do, tied to what we see our role in the world to be.   I believe America does have a unique role as world leader, but to paraphrase Sam Nunn (D-Ga.), a former chair of the Senate Armed Services Committee, it’s time to restore the idea that the United States would help countries, but those countries must help themselves.  As another panelist put it, we should be “a catalyst for common action”, implying an active but less dominant role than has been our American way over the past 70 years.

But could Congress come around to allowing the military to suggest the best cuts to make?   Hmm…  At least this forces the issue to some extent, and how it will play out could get interesting, as some Republicans oppose the military cuts while the Tea Party views them as a victory.

Since Defense, along with Social Security and Medicare make up about 60% of federal expenditures,  spending cuts take on the “guns vs. butter” dynamic, so the fundamental question is:  How much defense spending is really enough?  (*2).  As David Wessel of the Wall Street Journal has pointed out, our military expenditures are greater than  the next 17 nations combined, our navy is larger than the next 13 nations combined and we have 11 carrier strike groups while no other nation has more than one.   We replace a carrier with a new one every few years, and they costs about 11 billion each?   Could we get by with 10 or even nine? (*3).

So maybe letting the sequester happen will become  a good thing when it comes to military spending.   Now that the size of the cuts is no longer the  issue, but how they are to be made, the two parties might actually come to a sensible agreement.

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(*1)   It will be interesting to see the public reaction as the cuts unfold and the kind of impact it will have on altering them.   Here’s one  place to start, a story about a small Kansas airport planning to cut out its control tower.

(*2)  A problem of talking about cutting “defense”  spending is the word itself.    “Defense” raises the issue of safety.  How safe is safe enough?  I wonder if the debate would be of a different nature if we were talking about cuts in the War Department, as it was called  until the late 1940s.

(*3)  The Wessel facts come from either his book Red Ink or from a video I borrowed for a previous post.  Greg Mankiw, a highly regarded right leaning economist  has praised the book, so I believe the facts to be fairly presented.

MARCH MADNESS: The Sequester and College Basketball

Let’s look at next month’s Calendar.

March 1st – this Friday: I can find no indication that some sort of deal will be reached by Friday , so the “sequester” figures to go into effect, which means the government will cut about $85 billion between now and Sept. 30, about half from defense and half from other discretionary programs.  This means that roughly 7% of these two areas (by my quick calculation) is projected to be cut over the next few months, with cuts ranging from about 5 to 9%.

Those would be substantial cuts, and the Obama administration, wanting to put pressure on the Republicans, has been playing that up with details of what will be cut and the public pain it might cause, like long lines at the airport.  But the question is how and when will these cuts take place.  Some might not take place at all and others be quickly reversed.  For starters by Sept 30, “the nonpartisan Congressional Budget Office predicts that agencies will reduce actual spending by only about $44 billion, with the remaining cuts carried over into future years.”

So, right there the $85 billion in immediate impact is nearly cut in half.

Also, there will be no immediate impact, or next to none.   The cuts will happen gradually giving Congress the opportunity to make various adjustments in the days ahead, such as refunding elements that have been cut, most likely starting with the military.  Many of the cuts will come in the form of layoffs, which won’t begin to happen until April or so, giving Congress at least a month of flex time to do some horse trading.

It could actually become interesting.

The question is:  Who can find the leverage to get the other side to do what?  Right now the Republicans seem content to let the cuts fall where they may and blame Obama for coming up with the sequestration idea to begin with in August of 2011, even though they voted for it and Boehner made it sound like a good idea at the time (to paraphrase him: I got 98% of what I wanted).  I don’t think it worth arguing the point, but it is my understanding the Obama team did come up with the idea, being that these budget cuts would become automatic if the two parties could not work out a more sensible solution by now.

Furthermore, my guess is that even back then the President could imagine things coming to this point given Congress’s habitual inability to come up with sensible solutions to anything.  So,  if re-elected, he would have the advantage now, and recent polls suggest he does.  However, to speculate some more, I believe he thought the Republicans would have to work out a deal with him in order to keep part of their traditional identity in tact:   a strong military first and foremost.

The stumbling block has been that the Republican Tea Party types are so fixated on cutting spending, they seem willing to cut it from anywhere, even the military.   Or course, hawks like John McCain aren’t on board with that, but the Republican Party is more splintered these days than an old park bench, a topic I will let lay for the moment.

So the sequestration cuts, at least the first tiny slices, figure to begin Friday.

There seems likely little immediate impact of this congressional dilly dallying unless Wall Street gets spooked by it all.  So far they’ve taken it in stride. Teetering-on-the-cliff politics has become old hat.

March 19 – Tuesday:  The NCAA Basketball Tourney begins, a form of madness that is much more fun, at least for me. This year seems particularly wide open as there is no one team that has proven dominant with the #1 ranking bouncing around like a volleyball. For those of you who do pools, give the St. Louis Billikens an extra gander and a  Google before counting them out.

March 27 – Wednesday:   Supposedly the federal government loses its authority to spend money, or perhaps it is March 31 (I’ve read both dates). That means the government shuts down as happened for 28 days when Bill Clinton was President.  This sounds drastic and, given the present Congress, just might prove to be.  Who knows?  But we have a few weeks to take a closer look at this next “cliff”. 

March 31 – Sunday: – Those not really interested in anything said so far might want to know that the  Major League Baseball season begins with the Texas Rangers vs. the Houston Astros.   It also might be the day the federal government shuts down, but I doubt it.

SOTU: SOme Time U need to believe it to see it

I thought I had had enough of the State of the Union (SOTU) address, but reader Stormy Malone’s response merits general consideration.   My position has been I’ll believe it (Obama’s agenda) when I see it working its way through Congressional gridlock.   

However, I do believe that often one needs to first believe in something in order to actually see it happen.  Malone is a liberal activist who believes in President Obama’s vision and in the importance of stating it, as she argues below.  Since she makes her points well and avoids insulting me in the process, I want to give her center stage today.

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2013 SotU 50

2013 SotU 50 (Photo credit: Editor B)

For those of us who  are interested in active citizenship and taking the longview, I think vision in the SOTU matters as much as what can happen “tomorrow,” or even this year or this decade. To a progressive, the SOTU is not a piece of entertainment, but a roadmap of cause. We are the ones who canvass, volunteer, tweet, fund raise and blog to move a progressive agenda forward.

It’s why we finally have the ACA and why we will have Climate Change legislation before long, why immigration reform will happen very soon and why gun legislation will stay alive. We activists will not make the same mistake we made in 2010. We will stay on the do-nothing congress until it is extinct as a legislative majority and we will support of candidates in 2014 who can win and best fulfill the SOTU vision PBO laid out. We will be turning out folks to the polls.

Granted there are many like you who are impatient with the march of progress. That’s fine and your voices are as important as the activists’ voices. I can’t blame anyone for being indifferent, or for being frustrated because the President can’t “make it so.” But a legislative body in a democracy is not a sports “team” with a coach or a “crew” on a starship with a captain. There are no absolute voices in a Democracy.

Democracy is designed to be sloooooooow. It is Democracy’s great vulnerability because horrible injustices can happen as elected officials “debate.” At least now we have digital technology that allows the process to speed up, to reach critical mass on issues that have simmered for decades.

Within 4 short years this country flipped completely on gay rights, not because people changed but because a President, for the first time, spoke up. On a variety of gun issues, for the first time in decades, the president will force politicians to go on the record with a vote.

In short, I totally understand why you preferred to have others sum up the SOTU for you, but to an activist, a person who loves politics and cheers for the agenda of PBO, it is about as persuasive an argument as me arguing that catching the highlights of the Super Bowl is the same as watching in real time as the Ravens beat the 49ers.

And how many times have I seen Wisconsin play in the Rose Bowl? Why on earth watch again?

Why My State of the Union Message is Better

It is much shorter.

My Fellow Citizens,

The state of our union is so disunited that I am going to say little about it.

079 Capitol Hill United States Congress 1993

(Photo credit: David Holt London)

I like and respect our president, the latter largely colored by my sense that he has an impossible job, so I judge him less harshly than most.   When hearing him criticized I recall how President Lincoln was widely looked upon as an incompetent fool during most of his presidency.   Even his own cabinet took quite awhile to realize he had a lot more ability than “a well meaning baboon.”

Having said that, I am tired of hearing speeches by our current president.  I don’t have much audacity of hope left and need to see things happening rather than hear them talked about.  Tonight I can’t imagine him saying anything  momentous, and if I’m pleasantly surprised I’ll find out about it tomorrow.

For me it all boils down to what will happen in Congress over the next few months and whatever the President says tonight won’t affect that much one way or another.   According to Bloomberg News:    “The president will offer proposals for spending on infrastructure, clean energy and education, according to a senior official briefed on the speech. ….  He will also stress the agenda laid out in his inauguration address, pushing Congress for action on immigration, gun control, and climate change.”

It  all sounds good to me, but I want to see how it plays out, not hear more about it.   As indicated in my previous post, the across-the-board budget cuts (called the sequester) interests me more because they play out by March 2 (*1).  At least the next act of this ongoing tragicomedy does.   I am interested to see how that will be dealt with because sharp cuts in government spending can slow our economy as shown in the last quarter (*2).

Obama has said he would like the deadline to be pushed back again to the summer, so the two parties could work out a more comprehensive approach.  However, this strikes me as a ploy, for the Tea Party rump of Republicans seem willing to let the sequester go into effect and see what happens.  If it does, Obama will be seen as more reasonable and if the cuts do really make a negative impact on our economy, he can blame the Republicans.   For this reason I wouldn’t be surprised if John Boehner cooperates with the Democrats again and goes along with kicking the can down the road.  But if he does that, I wonder whether it will split the Republicans apart, or more apart than they already are.

That is what I want to see and believe it will be necessary for much of anything to get done in congress.   As long as the Tea Party folks have enough power to veto what they don’t like, which is anything that includes compromise, not a whole lot is going to be accomplished.

With that in mind, I cannot imagine that the President will say anything this evening to make me glad I tuned in, so I think I will watch college basketball instead in preparation for filling out brackets for one of my favorite sporting multi-events:  March Madness (the NCAA basketball tournament for the sports-challenged).  There will be plenty of analysis tomorrow in case I miss something noteworthy.

If I learn something interesting, I’ll write about it later this week.

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(*1)   When talking about across the board cuts in spending, we’re really talking about cuts to about one-third of the overall spending, the discretionary part as opposed to entitlement programs and interest on our debt itself, which automatically go into effect each year.   That’s why we often hear someone arguing that to really deal with our debt we must deal with entitlements.

(*2)   In that last quarter, a sharp drop off in military spending was the primary cut back and under the sequester it would be the primary one again because about 24% of our entire budget is spent on the military.  Or think of it as about two-thirds of that one third of the entire budget that is spent on discretionary spending.   Linked here is a pie chart of federal spending.