Friday, March 1, 2013

The Next Manufactured Federal Fiscal Crisis

The manufactured deadline has passed. The automatic cuts directed by the "sequestration" bill passing in 2011 take effect. Is that it? No. March 27, 2013 is the next big date.


According to self-proclaimed communist Maxine Waters, the 134 million Americans that are currently employed are going to lose 170 million jobs. Math is hard for some people.

According to the rhetoric coming from Obama, Pelosi, and others who want you to believe  the government is in charge of your life and livelihood, we no longer have policemen, firemen, and school teachers.

Yet I saw police cars patrolling this morning. I saw kids going to school. My electricity still works, as does my internet connection. Yours must be working as well, since you are reading this.

Some people's memories fail. In 1995-96, we had a "budget crisis". Newt Gingrich and his conservative majority in the House of Representatives were deadlocked with President Clinton, who refused to sign their budget. We faced a "government shutdown". Some federal bureaucrats had to take a few days off from work. However, the same alarm was sounded. "The world will fall into chaos!" There were even rumors that military service members would end up without pay and benefits. However, laws in place at that time exempted military pay and benefits, VA benefits and services, Social Security, and Medicare from being shut off. I was in uniform at the time. It was explained to us that, simply, we'd still have  to honor our oaths and contracts; and we'd still be paid, fed, and housed.

The next manufactured "fiscal crisis" deadline is March 27, 2013. That is when the federal allocations are estimated to run out. This will bring about more finger-pointing and suggestions for fiscal irresponsibility as politicians debate raising the federal credit limit termed "the debt ceiling" in order to continue operations.

Before we examine that next crisis, let's take a look at how this "sequestration" is poised to be enacted.

In response to congress allowing, so far, the spending cuts to take effect, the White House's Office of Management and Budget issued a memorandum directing executive branch bureaucrats how to manage the cuts. Here is an excerpt:

Increased Scrutiny of Certain Activities

In determining the appropriate manner to achieve funding reductions, agency heads must also ensure that their agencies have risk management strategies and internal controls in place that provide heightened scrutiny of certain types of activities funded from sequestered accounts. To the extent these accounts remain at the post-sequestration funding level, increased scrutiny should apply to:

• hiring new personnel;

• issuing discretionary monetary awards to employees, which should occur only if legally required until further notice; and

• incurring obligations for new training, conferences, and travel (including agency-paid travel for non-agency personnel).

In light of the reduced budgetary resources available due to sequestration, expending funds on these activities at this time would in many circumstances not be the most effective way to protect agency mission to the extent practicable. Therefore, agency leadership should review processes and controls around these activities, and ensure that these activities are conducted only to the extent they are the most cost-effective way to maintain critical agency mission operations under sequestration.

Over the past couple of years, the Veterans' Administration has engaged in defrauding taxpayers and the veterans they serve. They conducted "training conferences" that involved bloated spending on videos, luxury hotel accommodations, and entertainment at these conferences. Those tax dollars would have been better spent on actually servicing veterans rather than creating vacations for bureaucrats.

That is just one example of where bloated executive bureaucracy spending can be cut without impacting necessary federal services.

Here is another from a Government Accounting Office report:

"A personal trip taken by the Attorney General to New York in November, 2010 using the FBI’s Gulfstream V had an estimated flight cost of $15,894, but the reimbursement at the equivalent commercial fare was $420.80. The FBI’s flight data showed that the FBI Director took a total of 10 trips aboard FBI aircraft that required reimbursement from fiscal years 2007 through 2011, and he reimbursed the equivalent commercial fare for these flights totaling $4,556 in equivalent commercial cost, while 88 of the Attorney General’s trips required reimbursements during the same time period, and he reimbursed the equivalent commercial fare for these flights totaling $46,982." 

If you do the math, those 88 flights of Eric Holder's cost taxpayers about $1.4 million. The FBI Director's cost $159k. While they reimbursed an equivalent cost of a coach ticket, the difference is astronomical. Perhaps travel expenses such as these are where the OMB is suggesting cuts.

As revealed, though the "sequestration cuts" are "immediate", wheels turn slower than many believe. The true impact won't be felt until this summer. Any furloughs or reductions of federal civil service positions currently held, there is a process. First, there is a minimum 30 day notice, which could not legally be issued until today. Then there is an appeals process. Bureaucratic department and agency directors and accountants still have to enact plans for the reductions. Those plans will take time to go into effect, once approved.

While the bureaucrats in the executive branch chew on that bitter pill, we Americans can look forward to banter over that March 27, 2013 deadline. HJR 117 was signed into law Sept. 28, 2012. Without a budget being passed for the third fiscal year in a row, congress passed the bill to continue appropriations at the FY12 level into FY13 until March 27, 2013.

The "sequester" was Obama's warm-up. His next round of fear-mongering speech will now commence. Without a new appropriations bill, the federal government will run out of funding, by law. Obama and the socialists in congress will lobby for more tax hikes that most wage-earners cannot afford. He will attempt to push those hikes onto the "unfairly wealthy", asking them to pay "their fair share". Unfortunately, they already pay more taxes than your average middle-income family. To top it off, increased taxes on producers will be passed along to middle-income consumers through higher prices or decreased services. Those producers will be forced to decrease labor costs, many by cutting jobs.

Within this debate, Obama will most likely attempt to force any appropriations package to be "balanced", not only with those tax hikes, but proposals to raise federal minimum wage. That will also force employers to cut jobs, or at least hours of those employed. The PPACA is already forcing employers to look at how many employees they will be able to afford, cutting positions, and cutting hours from full-time to part-time. Any attempt to push a minimum wage hike will just aggravate the situation.

So, sequestration is here. So are we. March 27, 2013 will come and go. Americans will still be here. All we can hope for is that politicians are responsible in allocating appropriations for spending while insuring to not increase the burdens upon the very citizens who employ them.

If not, we may have to look at sending them pink slips come the 2014 mid-term elections.