Promoting freedom, innovation, and growth

Connect with IPI

Receive news, research, and updates

February 6, 2013

Who's Afraid of the Sequester?


The U.S. Congress has reached the point where it is almost incapable of fulfilling its most basic duties. The Senate, for instance, has not passed a budget since April 2009—more than a year before the first iPad was introduced.

This dysfunction has put the country on an unsustainable course, where federal spending continues to outpace even healthy revenue growth, resulting in a growing national debt that threatens to bury the U.S. economy under paralyzing debt service levels.

Our elected officials pay lip service to this problem, which is why last year Congress enacted automatic spending cuts (the “sequester”) as a forcing function that would hopefully lead them to address our fiscal problems in a meaningful way.

Of course, they didn’t, which means the sword is about to fall. And that means you’re going to start hearing from a nervous Congress and White House as they move from the easy rhetoric of fiscal responsibility to the painful reality of spending cuts.

Let’s get one thing straight: The sequester cuts are not even close to being large enough to put federal spending on a path toward sustainability. Just yesterday, the Congressional Budget Office released its latest forecast, which takes into account all of the sequester cuts, and still projects that the national debt will reach 101% of GDP—larger than our entire economy—by 2030. Interest payments on that debt will swamp almost all other line items in the federal budget long before then.

Is the sequester an elegant way to reduce federal spending? Of course not. But it may be the only way, given the dysfunction of Congress.

Just how painful will it be? Under the sequester, total federal spending for 2013 would be around $3.7 trillion, which is still higher than 2011 spending. Indeed, federal spending continues to increase every year—just a tiny bit less than it would have otherwise. In other words, the sequester doesn’t cut overall federal spending; it just slows its rate of growth.

But what about the defense cuts? Isn’t our national defense going to be “savaged” by the sequester cuts? Not really.

  • Defense spending would never fall below 2007 levels and would grow from there.
  • Defense spending would still be at higher, inflation-adjusted levels than during the Reagan defense buildup that broke the back of the Soviet Union.

If our elected officials in Washington can’t stomach the sequester cuts, which aren’t nearly large enough to put the country back on a fiscally responsible path, that’s proof that they don’t have the fortitude necessary to make even tougher fiscal decisions. Anyone who goes squishy on the sequester just isn’t serious about restraining government spending.

The sequester cuts aren’t draconian—they’re only a down payment. Let them happen.


  • TaxBytes-New

Copyright Institute for Policy Innovation 2018. All Rights Reserved Privacy Policy Contact IPI.

e-resources e-resources