If you have the opportunity, please take a look at Thursday’s editorial in the Wall Street Journal that looks at the coming automatic and drastic spending cuts that are about to hit the Department of Defense.
As I wrote in a recent column, the formal name for these automatic cuts is called sequestration, a budgetary tool in the Gramm-Rudman-Hollings Deficit Reduction Act of 1985. By this process, money to be doled to government agencies based on congressional appropriations is “sequestered” by the Treasury.
These are across-the-board cuts, affecting everything from the Department of Defense to subsidized school lunch programs.
The cuts are all a result of Congress and the president failing to agree to a debt reduction plan under the Budget Control Act of 2011. You’ll recall this is the law that gave us the so-called Supercommittee.
The Arizona Republic this week reported on a George Mason University study that Arizona stands to lose nearly 50,000 jobs. The Phoenix Business Journal, citing a separate National Association of Manufacturers analysis, reported that the state could be facing cuts of up to over 100,000 jobs.
These cuts could be absolutely devastating to our state’s economy, the nation’s economy and, most importantly, to our nation’s defense and standing in the world.
I applaud Sen. John McCain, Sen. Jon Kyl and Phoenix Mayor Greg Stanton for sounding the alarm bells over these cuts. Sens. McCain and Kyl together have introduced legislation that offers $109.3 billion in offsets required to replace one year of defense and non-defense sequestration. Their bill seeks to replace every three retiring federal employees with only two new hires, and it would freeze federal salaries through June of 2014. Mayor Stanton has been heading up a task force for the U.S. Conference of Mayors that is assessing what sequestration will mean for America’s cities, joining mayors from around the nation in warning of the damage these cuts could inflict on the nation during a time of tepid economic recovery.
The chatter in some corners is that the president and Congress will work out some sort of deal to avoid sequestration, but companies are already poised to issue layoff notices in anticipation of the fast-approaching January 2 deadline.
But uncertainty is exactly the opposite of what businesses need to grow and prosper. Whether it's the implementation of the health care law, these defense cuts, or whether we're staring down a huge tax hike (see the NAM briefing below), do we really want to engage in this high stakes game of chicken?
If you were running for re-election, is this the kind of news you’d want to campaign on?