In the last several years, new economic terms have entered the American lexicon. Debt ceiling, fiscal cliff, sequestration. Well, we reached a deal on the first one, though it lowered our credit rating, and eventually took a few steps away from the fiscal cliff, though the economy contracted due to fear of this cliff.
Tomorrow, we run back up the edge, and get to the third term: Sequestration. The idea that everything must be cut a small amount if there is no solution. These across-the-board cuts were meant to be something akin to mutually assured destruction. The theory was, if you don’t work together, you’ll both lose. Now, both sides are saying that the sequester will happen, and neither team wants to play ball with the other, despite the fact that everyone basically agrees that sequestration is bad policy.
Sunday evening, the White House released a state-by-state analysis of what the sequester would do if it is indeed enacted. As these are automatic cuts without any sense of fairness to each state, everyone loses at an equal percentage, though that does not mean that they all lose equally. For example, California will lose $87,000,000 in education funding from sequestration, while Montana will lose $1,500,000. This equates to over a thousand jobs in California, and twenty jobs in Montana. Clearly, one state school system is more impacted than the other. California may have to shutter some schools, while Montana would only have to shuffle some teachers around. I believe that everyone should take a look at their state, and the impact of the sequester.
I am going to discuss my home state of North Carolina and how the sequester hits the state. North Carolina has its own problems, most prominently high unemployment, though this issue is compounded by a state that is finding itself politically. North Carolinians chose Barack Obama in 2008, elected Republicans to the state legislature for the first time in a century in 2010, and chose Mitt Romney in 2012 by a handful of votes. This is a state very much in flux.
Institutions for which North Carolina is probably best known include its military bases and its education system, particularly the robust university system. Several of the state’s eight bases, Fort Bragg and Camp Lejeune, are among the largest bases in the country. The University of North Carolina system was chartered in 1789 and opened its doors in 1793, the first public school in the country. These are points of pride for North Carolinians, but, under the sequester, would be cut. Let’s see how the sequester would affect these institutions, and how it relates to the biggest problem facing the state right now: unemployment.
The sequester would affect the military bases in the following ways:
- 22,000 civilian jobs would be furloughed, saving $117.5 million.
- Army base funding would be cut by $136 million, fourth most of any state.
- Air Force operations funding would be cut by $5 million.
The sequester would affect the education system by:
- Reducing funding by $25.4 million, risking 350 jobs, 38,000 students, and 80 schools
- Reducing $16.8 million in funding from teachers in special needs classes, risking 200 jobs
- Reducing the number of students that receive work-study jobs or financial aid by 2,000
All these numbers mean that the number of unemployed will grow – either through teachers and civilian Department of Defense employees losing their jobs or being furloughed, students unable to afford tuition and therefore joining the job market early, or students who never get the opportunity to finish secondary education, joining the workforce as early as possible.
Everyone is talking about jobs, and how jobs will lead to growth, but the sequester will only inhibit this growth.
Other measures that will cost North Carolinians their jobs if the sequester goes through on Friday:
- Up to 1,300 people could lose access to child care, making parents choose between working or caring for their child on their own.
- Job search assistance will be cut by $83,000, which hurts the job prospects of around 15,000 people.
Adding these numbers up, this equates to around 40,000 North Carolinians that will be struggling through furloughs, looking for work but cannot find it, unable to attend college to get the funds they require, therefore beginning the job search early, or getting laid off due to education spending cuts. Adding 40,000 people to the state’s unemployment rolls would undo about a year’s worth of progress, and with the new law that reduces benefits to those receiving unemployment insurance, this sequester is going to be disastrous for those in North Carolina that need help the most.
It is not just North Carolina, however. Check the White House’s site to see how your state will be affected.
We cannot cut our way out of this recession. Look to Europe if you believe that austerity is the way to prosperity. It has failed there, and will fail here. No amount of American exceptionalism will save the country from proven failed economics.
What we need is some good old-fashioned Keynesianism. You know, unleash government spending when in recession, decrease spending in a boom, the economic model that got the world out of the Great Depression. This is the way to the light. Recently, the International Monetary Fund admitted that austerity was not the best way out of the Great Recession, but rather the Keynesian model worked best. What we have been doing, and would further do if the sequester occurs, is going opposite to the historically proven ways to get out of recession.
What the sequester boils down to in the end is politics. It is, as I stated earlier, the nuclear option. If we can’t work something out, we all lose. However, there is one side that will lose more than another if the sequester happens: the GOP. They’re really in a no-win situation right now. If the sequester occurs, they get blamed, but if they allow taxes to increase again (remember, the fiscal cliff deal wasn’t a tax increase, then it apparently was), then the donors these politicians are beholden to will not be happy. We cannot play partisan politics when the future of the nation, and really the world, is on the line. When you choose to serve the country in one political nature or another, you take an oath, not to the party, not to your donors, but to the nation. We need leaders who are willing to step up to the plate at this crucial time and make the right decisions for our country.