Sequester Semester

TSA workers on break, smoking in front of a “No Smoking” sign

Lloyd and I meet for breakfast most Saturday mornings, and while we are eating we solve many of the world’s problems. Last Saturday, the topic was the sequester. How does the government cut a couple percent from spending without the collapse of Western Civilization? When viewed from the Pancake House in Oak Forest, IL, it should be very easy.

The situation reminds me of my former employer, Amoco Oil, just after being acquired by BP. I had retired a few months earlier, and like many retired old men became an energy industry consultant. I kept in touch with the people at Amoco who I had relied upon when I was still lobbying in Washington and several state capitals. In every large bureaucracy (government or corporate) there is an 80/20 rule. Eighty percent of the work is done by 20% of the people. The rest are pretty much superfluous. A year or so after BP acquired Amoco, the company had laid off about 80% of the former Amoco people. Interestingly, all the people that I had formerly relied upon were still there. BP figured out who had made up the superfluous 80% and terminated them, then everything went along fairly well.

The same 80/20 rule should apply to the government. The President has played the usual political hoax and warned that the government will soon start laying off firemen and TSA inspectors. He said that waiting time at the airports will increase by two hours. Interestingly, every time I fly I have a habit of counting all the TSA agents. About 20-25% are always standing around doing nothing but visiting with each other. The sequestration will reduce TSA agents by about 2-5%. In an ideal world, this should only reduce their visiting time.

My fear is that in the real world, the two hour delay will become a reality if the union institutes a “slowdown” strike. Has the President signaled the union to target a two hour slowdown? Thirty years ago we had an air traffic controller slowdown and strike, but we had a different President who successfully managed that situation.

But let’s get back to where rational cuts in government expenditures could be made. In March 2011, the U.S. Government Accountability Office (U.S. GAO) published a report entitled “Opportunities to Reduce Potential Duplication in Government, Save Tax Dollars, and Enhance Revenue.” They identified 81 areas for consideration. The programs highlighted by the report cost taxpayers between $100 and $200 billion annually. A 10% improvement in efficiency for those programs could cover nearly half of this year’s sequester, and not lay off one fireman.

Obama says food inspections are a potential problem area to cut. The GAO pointed out both the FDA and USDA are responsible for food inspections, with a lot of overlap and duplication. The FDA inspects all seafood, with the exception of catfish, which is the bailiwick of the USDA. Similarly, the FDA is responsible for eggs while in the shell, but once the shell is cracked, the USDA is in charge. Each organization has its own cadre of regulation writers, inspectors, enforcement lawyers, etc.

There are 82 programs spread throughout several government agencies all designed to improve teacher quality. Each agency has a separate department to administer these programs, and I suspect many of the programs are inconsistent with one another. 

The report also points out that addressing duplicative federal efforts to increase fuel ethanol production could reduce revenue loss by $5.7 billion annually. The report goes on and on and on. And still without laying off any firemen! 

To save money the GAO report did not even recommend that the U.S. General Services Administration (GSA) should stop more multimillion dollar retreats to Las Vegas—with or without strippers. Excuse me, the strippers were with the Secret Service.

Finally, I read that the Defense budget is being cut back to the level it was in 2007, when we were actively fighting two wars with a couple of hundred thousand troops in the field. Now we are essentially out of Iraq and are winding down in Afghanistan, but spending more. It would seem there is some room to save.

In the short term, the sequester will not hurt the U.S. economy. It is a rather dumb blunt instrument to try to instill some fiscal discipline. I am truly saddened by how dysfunctional our government has become.

A far wiser strategy would be to foster economic growth. The country could accelerate energy development, which has not been a government priority but has been happening wholly outside the governmental sphere. In the meantime, it would be great if the political leaders could come together to begin addressing the sequester, the budget and tax reform, and right the economy before the sequester does get scary.

Question: Should American military spending be cut dramatically?

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16 thoughts on “Sequester Semester

  1. Richard Bafford

    Very nice article and I couldn’t agree more. The military budget certainly should not be slashed to the bone, but c’mon… Give the generals a budget reduced by, say, 10% and I’d bet my next paycheck they would find ways ot cut without causing bloodshed, or even tears. We’ve all heard about the $75 hammers and $200 toilet seats. It’s safe to say they could cut at least 10% without even reducing personnel. Crimony, how about we CHARGE Egypt for the F-16’s and tanks were sending over there to blow up Jews?!

  2. Josh Weaver

    I agree that cutting government redundancy is essential and there is massive wasteful or duplicate spending in Washington that needs to be dealt with. I am all in favor of cutting the TSA(see: worthless security theatre) and the military as well as the redundancy you mention between agencies like the FDA and USDA. I would like to point out however that these types of cuts need to be handled in an organized logical manner rather than blunt austerity. Austerity programs have failed every European nation that has employed them and are largely responsible for the current double-dip recession we’re seeing in Europe and why their economy never really recovered in the first place. What was supposed to make things better has made the economy worse in almost every instance.

    Cutting government spending in a recession is suicide and austerity is largely a failure. So while I agree that military and agency redundancy are wastes that need purging I can’t agree with cuts to programs like unemployment or support any tax raises on the middle/lower classes similar to what we’ve seen in Europe, unless we want to end up with an economy like Greece or Italy.

  3. Bruce Mackintosh

    I’m sure there is waste in the defence budget however with China coming on strong It wouldn’t be wise to cut too much. Our world is a dangerous place and a very strong military now and in the future will ensure our secuity.

  4. Ray Frattone

    It is a fact in my opinion that no U.S.government will ever be anything even close to being efficient unless we have term limits in congress. Get elected, serve your term and get out and go back to work period.

  5. arpad

    One thing to consider is that the “dumb blunt instrument” of sequester, despite the attempt to drum up hysteria at it’s application, has resulted in a big yawn.

    The obvious take-away is that the American people are seeing through all the blather about “social safety nets” that justifies just about everything and, despite trying to spin it as an “investment”, is merely the usual, morally and economically bankrupt redistributionist policies that have helped crater several European economies and will, if we let it, do the same in the U.S.

    Cutting government spending, along with taxes, has repeatedly proven to have an immediate and long-lasting stimulative effect on the economy.

  6. Josh Weaver

    Arpad, what you’re saying is patently false. “Cutting government spending, along with taxes, has repeatedly proven to have an immediate and long-lasting stimulative effect on the economy.”

    Wrong. Cutting government spending is in the process of destroying the European economy, granted in that instance it was coupled with tax increases but the past and present has repeatedly shown that cutting spending in a recession HURTS your economy. Please read this article and inform yourself.

    Where is your evidence to support your argument? When has cutting spending and taxes had such a boon effect on our economy? Our economy in the US was the best it had ever been in the post WWII period when taxes were at some of their highest rates and government spending on infrastructure was bloody massive.

  7. OldJarHead

    Josh, you are drinking to much Kool-Aide buddy. If you at home are spending twice what you bring in, how do you get back on track? CUT SPENDING. Reagan did it and TRIPLED revenues to the Treasury. Our gov’t is a liability, they are a consumer not a producer. 47-51% of the population is getting a check from our paychecks. Simple math equates it can not continue. Millions of illegal aliens costing thousands per month in social services and lack of income tax payments. Foreign aid at levels higher than most countries GDP’s, dozens of multi-million dollar vacations by your king and queen and idiots like pelosi flying home every week on a taxpayer jet. It has to and must stop. As far as those completely useless TSA thugs. I fly 50-60 flights a year and as a group these people do nothing to enhance security. Most are morbidly obese and they sit around talking to each other about nothing. I stood waiting for my bag for 4 minutes the other day while two of these slugs talked about why one of them should have her car fixed after a fender bender. I also watched one come to a gate and sit on a bench against a wall which hid him from view of the main aisle. He proceeded to SLEEP for 51 minutes! When my flight was called, I kicked his foot on the way by and said “thanks for keeping us safe!” I have had to tighten my family budget by 25% in the last 3 years, guess what, my kids eat 3 squares a day, my house is in good order. If I and millions of other taxpayers can scarifice our hard earned way of living without sucking on the gov’t teet, then the dam gov’t and welfare recipients can too!

  8. hanktbd

    Excellent article. The blunt instrument and disfuntional congress can be laid at the feet of the illegal but common practice of gerrymandering voting districts. Once a voting district becomes a lock for the Dems or Reps, the election challenge comes from the more radical right or left rather than the other side of center. Even reasonable pols cannot vote the good of the country for fear of being labeled as sold out to the other side and losing their reelection primary to a radical idealogue. Congress will continue to be disfunctional until this problem is corrected.

  9. dave

    Cutting the waste, following the GAO report, is the obvious way to go.

    IMHO, term limits will help in the long haul coupled with a Constitutional Amendment that requires sunset provisions in every law. Any ineffective or poor law goes away without too much gnashing of teeth. Good laws are revisited periodically by new eyes, plus it keeps congress too busy to pass new BS.

  10. Josh Weaver

    Okay. Here goes.

    > If you at home are spending twice what you bring in, how do you get back on track?

    Running a government and running a household are vastly incredibly stupendously different things, regardless of what the talking heads on Faux News will tell you. To compare the two is a fallacy.

    >Reagan did it and TRIPLED revenues to the Treasury.

    Reagan also raised taxes when they needed to be raised. Take a look at what happened to the national debt between 1981 and 1989. It skyrocketed.

    >Our gov’t is a liability, they are a consumer not a producer. 47-51% of the population is getting a check from our paychecks. Simple math equates it can not continue.

    What does this even mean? Our economy is based on consumption, without consumers we have no economy. 47% of the population is getting a check from ours? Now who is drinking the kool-aid? FOR SHAME to all of the senior citizens on social security and medicare, what useless evil drains on our economy! For the others included in that 47% who pay no income tax due to deductions or the fact that they make almost no money you’re willfully ignoring all the other taxes that exist in America. Sales tax, gas tax, property taxes, sin taxes on tobacco and alcohol, registration fees etc. They aren’t “on the dole”, they aren’t contributing nothing and they aren’t stealing from your paycheck.

    >Millions of illegal aliens costing thousands per month in social services and lack of income tax payments. Foreign aid at levels higher than most countries GDP’s, dozens of multi-million dollar vacations by your king and queen and idiots like pelosi flying home every week on a taxpayer jet.

    I don’t support illegal immigrants or foreign aid, I never said I did, and I never said I was against the sequester as a whole but across the board spending cuts can be devastating to an economy, had you taken the time to read the link I posted you may have seen some evidence to support my position. Would you care to use some to support yours?

    Pelosi and her trips are a shame, but I have news for you, that is EVERYONE IN WASHINGTON. You think Boehner or Cantor are above that? Put the glass down, you’ve got a koolaid mustache.

    As for the TSA? Yeah, they are scumbag thugs, if you read my earlier comments you would see that I’m in favor of them not existing. They’re worthless and they only exist because your poster boy George Bush created them and funneled billions into their existence. You people act like Obama created the TSA.

    If you’ve had to tighten your belt in the last 3 years it’s because we’ve been in recession since 2008 and you’re a victim of problems that have been created over the last 30 freaking years, not the last 3. You can continue to be a mindless cheerleader for the Republican team or you can do 5 minutes of research on your own and read some sources from both sides of the argument. And for the record, I don’t like Obama’s leadership all that much either, I just refuse to be another cheerleader in this ridiculous sport of US politics. Picking one side is idiotic. Both sides suck. You pick people and vote on issues after you’ve educated yourself on both sides of the issue.

  11. John "Jack" Frost

    The question posed is, “should we cut Defense Spending.” Here is a little history. We reduced our standing forces to 240,000 in the ’30s. In our weakness Japan attacked us with our loss of billions and 700,000 plus young American lives. President Reagan gave us the “Peace Dividend” and President spent it, reducing the Armed Forces by one million plus warriors, and the al Queada attacked us. We lost almost 4000 innocent victims, plus thousand more in undedicated combat. We lost billions prosecuting these conflicts plus billions on cockamamie inventions to make our efforts a casualty free conflict. Natick Labs spent $3 plus billion developing camouflage uniforms that makes the troops more visible rather than the intent of hiding the warrior. We spent billions on body armor that is questionable in performance. And in the end we have made everything so heavy that the Taliban dances around our troops before they kill them.
    We need a much better system than we have to equip our warriors as a fighting force when we select equipment and weapons that are reasonably priced. Too use a meat axe on the military budget is also without merit. It will take a long time to put our house in order when the administration once accepts the discipline that they must submit a budget in a timely manner so that the best analysis may be applied.

  12. Terry Rineer

    They should lay off 1/2 of the goverment -then they will know what it feels like. Then maybe the other half would get something done besides pointing fingers at eachother.
    As for the military- get our boys home-the world will go back to their old ways as soon as we leave.

  13. JYMW

    cannot agree more with your article. Big govt, with more and more depts employing more and more people. And doing exactly nothing, or nothing of use to society !
    I am not going pay taxes just to keep those guys in their jobs ! They can increase their efficiency anytime. Just go overseas and see what the other guys are doing, and then come back to this country and you will feel you are in a time warp.

  14. Jerry Levine

    I want to thank everyone who commented on this article. While there was some harsh language, the thoughts were usually substantive. I only wish this exercise could influence the government’s policy making and functioning.

  15. Eric Shear

    Great article. One of the best I’ve read on this blog! At the end of the day we can make a better America with our most potent tool, our vote.
    I live in Illinois, outside of Chicago. If a vote for a better government was ever needed it is definitely in the People’s Republic of Illinois!!


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