Remember the sequester, the $1.2 trillion in across-the-board cuts that were supposed to destroy Western civilization as we know it? Chris Matthews called sequestration a “doomsday machine.” Other, more subtle commentators predicted an economic calamity for the Washington area. The word “austerity” clanged like a requiem bell.
Now it turns out we might just make it:
In the months since the automatic federal spending cuts known as the sequester took effect, the Washington area has added 40,000 jobs. Income-tax receipts have surged in Virginia, beating expectations. Few government contractors have laid off workers.
It’s too early to be certain, but initial indications are that the damage from the sequester has been modest and slow to develop.
Labor Department statistics released Wednesday showed that the area’s unemployment rate held steady at a seasonally adjusted 5.3 percent in April, the same as in March. The pace of job growth from January to April was only slightly slower this year than last year. Large government contractors are reporting relatively modest revenue hits and few layoffs due to reduced contracts.
That’s because the sequester wasn’t the meat cleaver that it was made out to be. The total cuts this year, reported to be $85 billion, actually amounted to $44 billion thanks to snake-oil budgeting. And after this year, the cuts aren’t even actual cuts; spending “reductions” are made against the rate of spending growth, not the actual level of spending itself. Ten years from now, the government will be spending $2.4 trillion more than it is today.
The Washington Post points out that some economists are still predicting a reduction in GDP from the sequester, and that may very well be true. Despite its inefficiencies, GDP counts dollars spent by the government. And remember that GDP took a hit in the last quarter of 2012 largely because of reductions in military spending. It would also be unfair to say that the sequester hasn’t caused any pain. Claire Healey reported yesterday on the troubles the Marine Corps is facing because of budget cuts.
But clearly the sequester isn’t going to be the eleventh plague of Egypt as some initially believed. Kudos to the Post for cutting through the hysteria, though this paragraph still made me chuckle:
Still, the cuts are beginning to sock some federal workers in the pocketbook by forcing them to take unpaid days off. An administration official estimates that more than 125,000 federal employees have been placed on furlough due to the sequester. Eighty-five percent of the Defense Department’s 770,000 civilian employees will be furloughed for 11 days this fiscal year, beginning in July.
When the people paying your salary are nearly $17 trillion in debt, losing only 11 days of work seems like a pretty good deal.
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