Sequester not necessarily a bad thing!

Congress enacted a tough new law last year that would require the federal government to spend significantly less in current fiscal year and in the following nine years.

The cuts were supposed to be so tough that it would force both parties to come to the bargaining table and replace the drastic cuts with sensible cuts and revenue increases instead.  However, it’s starting to look like that neither congress nor the White House is in any mood to bite the bullet and replace the sequester.  So will the U.S. economy come to an abrupt end on Friday/Saturday this week?

The short answer: No!

The White House was hoping that this sequester was going to push the Republicans over the edge and they would have to capitulate and agree to more drastic revenue increases (a.k.a. tax increases) and thus reduce the likelihood that the Democrats would have to cut too deep in Medicare and Medicaid.   The Republicans on the other hand are divided among its own ranks.  One side wants to make a deal, albeit not with the revenue increases the President is asking for, but the other side (Tea Party wing of the GOP) wants none of it.  They’d rather have this sequester go into effect, but in the end it’s a win for them the way they see it.  It reduces the size of government, it decreases spending and….it doesn’t increase taxes.  So like it or not…this sequester, pushed by Obama, will in the end actually end up benefiting the wishes of the Tea Party, not the White House, Democrats or Boehner’s/McConnell’s side of the GOP.  Who’s winning now?

So is a Tea Party victory good though?  Well, on one hand, yes!  It actually reduces the deficit, especially thanks in part to some big cuts in defense.  Let’s be honest, did you really think both parties were going to cut defense spending?  No of course not, but it will happen starting this Friday.  The Pentagon is too big, bloated and still outdated.  They’ve made progress in the past decade, by moving focus to special forces and drone warfare, which is the future of warfare to begin with, but its bloated size has never been diminished, which is a big burden on the U.S. deficit and national debt.  Therefore, for the first time in a long time these cuts will actually end up benefiting the country.

Of course it doesn’t solve the financial woes of the U.S. government.  Entitlement programs are in desperate need of reform, to sustain them, but also to keep them affordable without bankrupting the government.  Then of course there’s tax reform.  The government needs to streamline taxes by reducing the tax code, which can be accomplished by removing tax loopholes, lowering tax rates for both individuals and corporations, and then institute a fair tax rate by instituting a VAT on all goods and services.

For now….we’ll take the sequester as a start to cut wasteful spending.  I didn’t think I would ever agree with the Tea Party, but cutting something is better than nothing.  I’ll take it.

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