Don't Hold Back

Aug. 2, 2012
They believe that if they make it sufficiently complex, or scary, we’ll give them more money without demanding that they manage it responsibly.

When I interviewed a forging executive earlier this year he was glad to explain his company’s manufacturing activity and strategy for business development, but what really got him fired up was “sequestration” — the budgetary time bomb that will eliminate a long list of defense programs if some new agreement does not emerge to keep them in place.

As the Congressional Research Service explains, sequestration is a technique for “automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals.” The current prospect of sequestration relates to its inclusion as an enforcement mechanism in the Budget Control Act of 2011: the automatic defense cuts will happen if the Congress exceeds its appropriations allowance for each year from FY2012 through FY2021. Also, that 2011 Act stipulates that if the Congress fails to enact legislation by January 15, 2012 (they did fail) to reduce the federal deficit by at least $1.2 trillion, then sequestration of mandatory spending will be enacted each year between FY2013-FY2021, with a one-year sequestration of discretionary spending for FY2013, followed by lower discretionary spending limits for FY2014-FY2021.

Wait, don’t stop reading: I included that much detail as an example of how legislators think their constituents are too bored or distracted, or stupid, to understand how the game is played. If they just make it sufficiently complex, or scary, we’ll give them more money without demanding that they manage it responsibly.

Americans are living today with a bill for nearly $16 trillion, which represents all the current outstanding debts; it does not indicate the forecast deficits for projects and programs, which we will incur over time. This includes all manner of federal expenses and obligations, including defense programs. As citizens and responsible individuals, we should insist that costs be optimized everywhere, but an automatic suspension of payments is an irresponsible approach, likely to fail.

“Defense cuts are coming, but the worst thing we can do is make myopic decisions,” the forging executive explained to me. He described how purchasing executives for defense programs already are preparing for sequestration by trimming costs and choosing cheaper options for systems, designs, and materials. “I worry that those decisions are being made already, that we are making decisions to solve a problem that we have now,” he continued. “The long-term negative effect, the costs we are going to incur, even in the next three to five years, not to mention 10 to 15, because we are making such myopic decisions today, is staggering to me.”

Surely, forgers and other manufacturers supplying defense programs will be injured in the fall-out, but my source’s point was more expansive: the damage will be felt by workers whose jobs are made unnecessary —as FIA recently noted to members contemplating defense cuts, even the WARN Act does not apply! — and by states and localities whose tax revenues are reduced. Worse, perhaps, there will gaps in R&D, lapses in safety, and even risks to security if sequestration plays out in the coming months and years.

But, before we arrive at that point, understand this: Sequestration is a simplistic solution arrived at by feckless legislators who are unwilling to present their constituents with an honest explanation of their fiscal irresponsibility. They have simplified the fiscal task to “balancing” obligations rather than establishing principles, and now they aim to solve the crisis by prioritizing spending according to ‘fairness’ rather than ‘purpose.’ If our representatives are in office merely to determine how popular one or another outcome can be, and how those outcomes can be made to reflect their influence — well, then we might as well elect PR flacks and SEO experts.

Every trend of modern life is elevating the ability and authority of individuals, generally at the expense of governmental or legal authority. If the few expectations we have of our elected representatives —intelligence, responsibility, civility — are too much for them to assume, then the chaos that follows should be no surprise to anyone.

Robert E. Brooks I Editor