A local news outlet recently asked me about sequestration, the process by which discretionary federal spending will be automatically cut beginning Jan. 3, 2013, if Congress is unable to agree on additional steps to reduce the federal deficit. Sequestration will automatically cut over $1 trillion from the federal budget without regard to merit over the next 10 years. $500 billion will be cut from DoD over 10 years, meaning national defense will incur $50 billion of spending cuts in 2013 alone.
The threat of sequestration is causing mass uncertainty in the country and specifically in our region, because business owners who provide services to the federal government and the DoD have no idea where those $50 billion in cuts will fall. According to Reuters, Lockheed Martin CEO and Chairman, Robert Stevens, testified in front of the House Armed Services Committee, warning that if sequestration goes through, come 2013 they will need to cut 10,000 jobs company-wide. Under the WARN Act (The Worker Adjustment and Retraining Notification Act) companies are required to inform employees 60 days prior to a mass employee reduction.
Because Lockheed is completely uncertain of where the $50 billion in cuts will fall on January 3rd, 2013 they would have no choice but to prepare the company and their employees, for the worst.
The job loss implication of these across the board cuts will be devastating—to the tune of over 2 million private industry jobs lost. If sequestration isn’t stopped, it may drive the national unemployment rate 2 percentage points higher. This isn’t another ‘scare-tactic.’ This is the reality that has been decided for us by political ‘leaders’ who are unwilling to make the tough decisions.
Telos does a lot of business with the government, with the military and intelligence communities as our primary customers. But it’s not only as a businessman that I’m concerned about the sequestration implications and the general direction in which our country is headed. It’s as a taxpayer and a parent that I’m most appalled. It’s not just those in the contracting community who have a stake in this issue– we all do.
The lack of leadership in both Congress and the White House is astounding. Please don’t mistake that statement as a political commentary on either the Democrats or the Republicans—it is simply the truth and should be applied equally to both parties. It is truly appalling that the White House and Congress can’t work together to address our enormous deficits and ever-growing debt.
Rather than definitively saying which budget items are strategically important to the best interests of the United States, and as a direct result, which budget items are NOT strategically important to the best interests of the United States, both Congress and the White House have chosen the spineless alternative: a mindless, across-the-board whack at discretionary spending. ‘Whacking’ discretionary spending is not a replacement for making tough decisions.
No business leader would blindly cut 10% off the top of a budget. They would determine what functions are essential for the success of the company, and begin cutting the nonessential pieces, knowing that those cuts may affect employees, suppliers and partners. But leadership requires making tough decisions that are in the best interest of the whole.
Did you know that 50 years ago federal entitlement spending was 21% of the federal budget, and today it has grown to more than 50% of the federal budget? (Office of Management and Budget) That means that 50% of our federal budget is spent on auto-pilot. If that isn’t alarming enough, our unfunded promises and entitlement liabilities are well over $60 trillion. Why is no one talking about our entitlement and mandatory spending problems? Pretty simple actually. Politicians try to please everyone because they want to be reelected. Because their desire to be reelected is often a driving force, they are comfortable making promises they can’t keep—including the unsustainable entitlements like Social Security, Medicare and Medicaid that are bankrupting our country.
Sequestration puts the entire burden of deficit reduction solely on the back of discretionary spending – both defense and non-defense—and completely ignores the real problem… part of which is our entitlement spending and unfunded entitlement liabilities. Sequestration does not address what I have previously called the other two essential legs of the deficit reduction stool: entitlements and revenues.
If politicians are to ever get anything done, they have to quit digging in their heels on their own preferred leg of the stool in the hope that someday their point of view will completely prevail. Everyone needs to understand compromise is not a dirty word, particularly if it achieves the greater good of getting meaningful deficit reduction.
Everyone has priorities. But collectively our nation has accumulated so many ‘priorities’ that it is preventing us from taking effective action on what has to be our number one national priority – reducing our unsustainable deficit and debt burden. It’s time for sacrifices. It’s time for leadership. And it’s time for action.
I invite you to watch the documentary IOUSA and IOUSA Solutions at http://www.iousathemovie.com/. These short films take a non-partisan look at our national debt burden and the impact of out of control spending.