Sequestration Math

The media are bombarding us with stories of how sequestration, with its “drastic cuts” in government spending, will affect our lives. Marketplace ran one yesterday about the USDA and the potential loss of federal meat inspectors. Don’t worry, we were told, the authorities won’t allow tainted meat on the shelves! But they might inspect more slowly, meaning less meat for sale, and higher prices.

Not being a reporter, I thought it would be useful to collect some facts. So I spent 5 minutes on the CBO website and discovered the following. The USDA spent $145 billion in 2012. Its proposed budget for 2013 was $155 billion, a 6.9% increase. Of that, $128 billion is considered “mandatory” spending — e.g., payments to farmers based on a formula — and isn’t affected by the sequester. What’s in play is $27 billion of projected “discretionary” spending. The sequester cuts that by 8% to about $24 billion. So the sequestered 2013 budget is $152 billion, a 4.8% increase over 2012.

Man, that is one savage cut!

Comments

  1. We see this in the UK as well. Even official public spending figures are inert. Despite the “savage” cuts we hear of in the media, spending on the worst offenders continues at the same pace! People whinge about cuts to libraries (really, who uses these? finance them privately if you do!), which are more matters for local governments, which by the way, have not reduced their spending or taxation either.

    I am hoping if Scotland goes independent, we will see their socialist leaders dethroned and a market economy developing there, since they will no longer be able to rely on London’s teat (the amount of wealth which London represents in the UK is staggering – the rest of the UK is a hinterland next to the capitol.) I think a divorce will benefit both parties and we’ll see real spending cuts, especially since as we are seeing, the £ doesn’t have the same power as the dollar or euro when it comes to selling its currency down the gutter. Equally, if the UK or a freed Scotland joins the Eurozone, their ability to inflate will be severely circumscribed, which I see as another reason for the UK retaining its own currency and swallowing the bitter medicine of genuine cuts. One can hope.

  2. Dear Peter,

    After I read your post this morning, I followed the link to the article on Marketplace. I see that you took Dumky’s suggestion and posted your comment there. At the time I visited, it was the only comment posted.

    Well done!!!! Case closed.

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