The Sequester: Don’t Run Your Business Like the Government

Remember last November when they announced the impending fiscal cliff and we all spent two months listening to Democrats and Republicans attack each other over reducing the national deficit? Do you remember the joy of realizing it was all behind us so we could focus on real news like Banana Joe winning Best in Show at the Westminster Kennel Club Dog Show?

It was a nice break while it lasted. Next week our politicians will cross over the latest deadline they set for themselves to resolve spending cuts to balance the budget. Why does this keep happening?

In 2011, House Speaker Boehner set a dollar-for-dollar match policy for the debt limit. Every dollar spent would be matched with cuts to federal spending. They set the limit so that the treasury wouldn’t hit the borrowing limit until 2013. By this logic, the federal budget cuts would keep our debt below the limit and we would never hit the debt ceiling.

Lo and behold, we hit the debt ceiling. The plan was to avoid it until 2013 so it wouldn’t interfere with the 2012 election. If politicians blew past the deadline of January 2013, they would have two months to form an agreement before severe budget cuts would kick in. When people refer to the sequester, they are referring to these automatic budget cuts.

Image: Boehner, Cantor Talk To Media After GOP Conference Meetingvia, courtesy of Chip Somodevilla/Getty Images

The sequester was meant to create such a severe incentive that politicians would be forced to work together. The $85 billion dollars of cuts between now and September would chop about 13 percent of military spending and nine percent for nonmilitary. If you don’t think in terms of dollar signs or percentages, sequestration would lead to about 750,000 cut jobs.

These cuts are actually just the beginning. Over the next decade Congress would work to cut an additional $1.2 trillion dollars in spending. The Associated Press said, “The sequester isn’t a government shutdown; it’s a government slowdown,” and that’s exactly it’s going to do to the economy. The government is the largest employer in the US and a slowdown will affect industries reaching as far as meat packaging.

So where do the two sides stand? If you’re fiscally conservative you may not support cuts that are proposed, but you favor slicing the budget to avoid tax increases. If you lean more on the democratic side you believe that these cuts can be avoided by increasing taxes – preferably on the upper class. Naturally, Republicans, Democrats and the White House all have different ideas about how to solve this problem and all believe the other groups are unreasonably failing to compromise.

Could you imagine if you ran your company like the government? You and your employees would set deadlines to finish projects, fight with each other every step of the way, fail to have a finished product by the deadline and point fingers at everyone else for the failure. We wouldn’t accept business practices like that in the private sector, so why do we let it slide in government?

About the author

Amanda Dodge