The Sequester That Cried Wolf

In the run-up to the sequester, which began March 1, Obama made every effort to scare the American public into believing the sky would fall as a consequence of cutting $85 billion out of a $3.8 trillion budget – about 2%. That’s decimal dust in a $12 trillion economy. Nevertheless, for political gain Obama has done his best to choose spending cuts that are as painful as possible, hoping that Republicans would cave, as they have before, and agree to more taxes on the rich.

Air traffic controllers have been furloughed to absorb the $600 million that was cut from the Transportation Department budget. That prompted a letter from Senator Tom Coburn to Transportation Secretary Ray LaHood detailing how he could save $1.2 billion instead of intentionally inconveniencing travelers with average flight delays of 90 minutes to score political points. One of Coburn’s suggestions was to terminate federal subsidies to “Airports to Nowhere” – so-called because they service fewer than 10 passengers daily. Coburn also reminded LaHood that his department had $34 billion in appropriated but unused funds from prior year budgets.

Homeland Security Secretary Napolitano released 500 illegal immigrants from detention facilities and promised to release as many as 10,000 detainees awaiting deportation, saying

All I can say is look, we’re doing our very best to minimize the impacts of sequester. But there’s only so much I can do. I’m supposed to have 34,000 detention beds for immigration. How do I pay for those?

Napolitano also furloughed TSA screeners, slowing down the time required to get through security. She gave no thought to canceling an HSA grant enabling the purchase of an underwater robot by Columbus OH – which has no major rivers or lakes nearby. No thought given to canceling a grant to Keene NH, population 23,000, enabling the town to buy a $300,000 BearCat armored personnel carrier to guard its annual pumpkin festival. Not enough pain involved in either of those. Trimming its ridiculous grant programs by a third could eliminate TSA furloughs entirely.

Coburn noted that if cabinet secretaries are going to use furloughs to deal with sequester cuts why not furlough employees who don’t bother to show up for work at all. The notoriously inept Civil Service System reported about 3.5 million hours were lost by AWOL federal employees – enough to scan almost two billion checked bags … enough to avoid security delays for four years.

Obama did his share by canceling White House tours and threatened to cancel the annual Easter egg roll on the White House lawn. So, school kids who visit Washington during spring break are denied access to a house that the American people, not the occupant, own. This stunt will save about $2 million annually according to the Secret Service. Are there other ways the White House could save $2 million? You betcha’.

How about cutting back on travel? Despite the fact that his home and office is in the White House, Obama has averaged 184 travel days per year for every year he has been in office – a trip every other day. Every time he cranks up Air Force One it costs the taxpayers $180,000 per hour to operate that thing and that doesn’t include the support cost. So eliminating one coast-to-coast round trip would open the White House for tours again.

How about a little less partying? The annual Obama clan soirée to Hawaii costs taxpayers $4 million and they’ve been there five times – $20 million bucks so far and counting. Obama had to return to Washington from there this year to sign the fiscal cliff paperwork, which added another round trip because he rejoined the family. Are there no fax machines, no FedEx deliveries in Hawaii? Their late summer vacation in Martha’s Vineyard costs taxpayers a couple of million. His recent golf outing with Tiger Woods cost a million dollars (now there’s a golf outing!) and the dinner party he threw for Mexican President Calderon in 2010 cost a million bucks. British taxpayers pony-up $58 million annually to support their royal family. American taxpayers cough up $1.4 billion to support our royal family.

How about a little less staff? Obama has a larger White House staff than any administration in the history of the Republic and he pays them more. A third of the 457 people who work there – three of whom are calligraphers – make six figure salaries.

Even as the White House was slamming the doors on tours, employees of the Agriculture Department were packing their bags to attend a California farm conference that would feature sipping “exceptional local wines” and sampling “tasty dishes” prepared by “special guest chefs.” So while meat inspectors were being furloughed other people in the same government agency schlep out to Fresno to indulge in what the conference organizers said would be a “mouthwatering event” with “fine wines and exceptional micro-brews paired with seasonally driven culinary delicacies,” not to mention field trips and other fun events. Furloughing meat inspectors causes pain. Canceling a junket doesn’t.

The National Institutes of Health is wasting $1.5 million to study why lesbians get fat. Why does anyone get fat? They eat too much. The National Science Foundation is wasting $325,000 to build a robot squirrel. Why a robotic squirrel? I’ve got an epidemic of the real thing in my back yard that I’d be glad to donate. The EPA gave China $141,000 to study pig manure. Have we run out of pig manure in this country? Will the sequester shut down any of these boondoggles? Not a chance. Who would miss them?

In a government that costs $3.8 trillion to operate, you’d think there would be some fat that could be cut somewhere. Federal spending has doubled since 2000 so it’s hard to believe 2% can’t be whacked back. When the payroll tax holiday expired, wage earners had their incomes cut by 2%. Somewhere they had to cut 2% of spending. They did and they survived. In the last decade the median household income fell 5% and median wealth fell 23%. Over the same period, government spending increased 90%. Families creatively found ways to do more with less while government says it will have to do less with more. Obama and his big government liberal pals would have us believe that whatever size the government is at the moment, that is the smallest it can ever be to avoid unbearable suffering.

Yet the Government Accountability Office has studied the cost to taxpayers for overlapping and duplicated programs and found that $364 billion is wasted every year on 15 financial literacy programs run by 13 separate agencies, 209 science, technology, engineering, and math education programs run by multiple agencies, 44 overlapping job training programs, 18 nutrition assistance programs, 82 teacher quality programs, and 20 homeless programs – just to name a few.

Ronald Reagan famously said the closest thing on earth to eternal life was a government program. Don’t expect to see any of this waste eliminated. No one would notice they were gone. Instead furlough some highly visible first responders, or as Charles Krauthammer recently observed:

It’s firemen first. That’s the phrase coined in 1976 by legendary Washington Monthly editor Charlie Peters to describe the way government functionaries beat back budget cuts. Dare suggest a nick in the city budget, and the mayor immediately shuts down the firehouse. The DMV back office, stacked with nepotistic incompetents, remains intact. Shrink it and no one would notice. Sell the fire truck – the people scream and the city council falls silent about any future cuts.

Obama’s wolf cries are causing him a serious credibility problem. His approval ratings have been falling since mid-December and are now at 48% with equal disapproval rating. Calling a press conference – his standard propaganda method – he bemoaned that Capitol Hill employees will be getting a pay cut due to the sequester, which a Capitol supervisor almost immediately denied, making him look foolish. Saying that 70,000 kids would be kicked off the Head Start program when the Annie E. Casey Foundation, an organization that compiles numbers on Head Start enrollment, shows enrollment rose by 3,000 between 2011 and 2012 to 1,128,000 makes him look clueless. A 70,000 enrollment reduction would be 16% of the kids in the program, which belies belief.

We have a government that must borrow over 35% of what it spends and Obama denies that government has a spending problem. Erasing the deficit, he says, must be done with a balanced” approach – i.e. spending reductions matched by tax increases – but I don’t recall the deficit being caused by spending increases matched by tax reductions. Seems to me that it was disproportionate spending increases on the heels of comparatively small tax reductions. The way the deficit went up is the way it ought to come down.

No matter. Taxes can’t be increased that much anyway without putting the economy in a tailspin. But as long as we’re on the subject of “balance,” I recall the outcome of the fiscal cliff negotiations being a dollar of reduced spending for $40 in increased taxes. That’s Obama’s idea of “balance.” And despite the fact that 100% of the federal taxes are being paid by about half the income earners, Obama constantly continues to carp about the rich not paying their fair share. Fair share? Let’s talk about “fair share.” The IRS recently reported that federal employees and retirees owe $3.5 billion in back taxes, and $833,000 in back taxes is owed by 36 officials in Obama’s executive staff. Obama ought to be hanging his head in shame. But he isn’t. His guys and gals don’t seem to be paying their “fair share.” Why is that? Why hasn’t the IRS garnished the wages of the delinquent federal employees and retirees as they do to private sector employees and retirees?

If private businesses want to stay competitive they must continuously improve productivity – they must do more with less. If they want to stay competitive, they must provide products and services that customers will buy, which is a different way of saying they must solve problems for customers in ways that the value of the solution is much greater than the cost of the solution (i.e. the price customers pay.) Thus, in a very real sense, customers “hire” the products and services businesses sell. What do they hire them to do? To help them get their own jobs done and/or solve their problems.

Fall short of that and customers become ruthless. If a product or service fails to deliver a distinct and superior benefit for considerably less than customers pay for it, they will drop it in a heartbeat and tell all of their friends about their miserable experiences. That may not seem fair but that’s the way the real world works.

Not so with government. It has no competitors and therefore no incentive to improve. They can hire five people to do a job easily done by three … charge you for all five people … and what are you going to do? Call Ghostbusters? Government can turn out a lousy service and what is your alternative? Hire another government? We have sub-standard public schools because government has a monopoly in public education, and liberals have proved that by fighting every effort to introduce school choice and competition. How efficient is public education in delivering its product? Over a recent 20-year period, the number of full time public school employees increased 250% faster than the number of students and yet test scores fell. What does that tell you?

Stand in a checkout line at Kroger’s, and additional registers will be opened to reduce the queue. Stand in a line for a government service (Social Security, the county tag and license office, Post Office) and you may see service windows closed so somebody can take their break or lunch. I have. The last thing a public servant wants to be is a servant.

No business would operate like Obama is responding to the sequester. Faced with the necessity to cut costs, businesses would reduce frills, unnecessary travel, surplus and duplicative services, unused and underused facilities and resources, and services with such low demand that continuing them can’t justify their cost (think Amtrak.) If government were a real business, it would fire managers who punish customers by cutting services before cutting waste, redundancy, and surplus assets. Because that doesn’t happen, government costs more each year to do less each year.

But despite the petty politics that Obama is playing to inflict pain that will pressure the Republicans to raise taxes – e.g. “sell the fire truck” – a new reality is settling in on Washington. Although the sequester was invented in the White House, it isn’t producing the anticipated pain. A recent Gallup poll revealed that 60% of the people surveyed said it hadn’t affected them personally.

An ABC/Washington Post poll showed by nearly a 2 to 1 margin (61% versus 33%) the public supports the budget cuts imposed by the sequester. But by nearly an identical margin, Americans oppose an 8% across-the-board cut in military spending, favoring domestic cuts but not military ones. Not good news for the Obama camp.

The Senate passed a Continuing Resolution by a margin of 73 to 26 this past Wednesday that will keep the government running when current funding ends March 27. It passed in the House by a 318 to109 vote and now heads to the White House. The $85 billion in automatic spending cuts known as a sequester remains in place, although the Defense Department has more flexibility in allocating its cuts. In other words, the sequester is the new normal. But at the end of the day, the Continuing Resolution just kicked the can down the road. The debt ceiling limit is looming. And the CR will run out.

If the sequester kerfuffle has showed anything, it showed Washington’s inability to tolerate even small cuts in spending. The sequester requires a reduction in federal spending from $46 trillion to $45 trillion OVER TEN YEARS! Hardly a sky splitter. If spending reductions this small can’t be contemplated without teeth gnashing, the federal government will never be able to make real cuts – which compel reductions in entitlement spending.

Absent cuts in entitlements, the sky really will fall. And the US will cease to be the world’s economic powerhouse.