1 Mar 2013

America prepares for a nationwide self-amputation

Washington loves its legal lingo. This, after all, a city of lawyers, and the latest term on everyone’s lips is the ominous sounding “sequester”.

The dictionary has it as “to withdraw, separate or remove possession of something temporarily from its owner”. It tends to refer to material possessions. But these days it might as well refer to the removal of sanity from the minds of lawmakers.

If the White House and the Republican-controlled House of Representatives (the lower chamber holds the purse strings in the US) can’t agree on a way to reduce the deficit with a combination of tax increases and spending cuts by midnight tonight, then $85bn of sequestration come into effect automatically.

Just to be clear, sequestration is a complicated word for something rather simple and brutal. CUTS. 9 per cent spending cuts across the board. It is a giant axe that will effect just about every government department like a blind guillotine.

For instance, if you are flying in the US any time soon, expect delays at airports because there will be 9 per cent fewer security heavies checking behind your belt buckle.

If you are long-term unemployed expect your meager benefits to be cut. An estimated 3.5 million Americans will be left high and dry.

Want to go and see the Grand Canyon national park in spring? Check the opening hours. They are likely to be reduced because the staff has been cut by 9 per cent.

Do you wish to import meat products into the US? Be patient. There will be fewer food inspectors to make sure your burgers don’t contain horse. 9 per cent fewer.

One aircraft carrier has already been confined to base instead of sailing to the Gulf, because the repairs needed have been cut. By a crucial 9 per cent. You get the picture.

The rules of the sequester are that you can’t redistribute cuts within departments or from one department to the other. Pain has to be spread equally to everyone. It is very democratic.

America is about to undergo a nationwide self-amputation that could shave as much as half a per cent off GDP growth. Since growth in the last quarter has just been revised upwards to a whapping 0.1 per cent, America’s next figures are bound to be negative. Most economists expect the country to slide back into recession just as it was recovering its pulse.

The impact on Britain’s economy, which Moody’s told us last week was in no state to withstand another shock, could be deadening.

“Haven’t we been here before?”, I hear you ask. You may remember that just as you were digesting your big bird last Christmas, President Obama broke off his family holiday in Hawaii to help negotiate a path away from the so-called “fiscal cliff”. This would have been a combination of automatic spending cuts AND tax increases.

It was a success, largely because Republicans, still licking their wounds after their resounding defeat in November, were cowed enough to agree to tax increases for those earning over 450 000 USD per year, i.e. the rich.

For many Republicans this was one concession too far. They point out, rightly, that the White House, emboldened by victory, has done little or nothing to suggest meaningful spending cuts. The White House points out, rightly, that they are ideologically opposed to any compromise. So both sides have dug their heels in.

A last-minute deal is less likely than the Second Coming, and the orgy of sequestration is set to start tomorrow. There is, as you would expect, a major row brewing about who first had the stupid idea of the sequester after negotiations to raise the debt ceiling ended in failure in the sweltering summer of 2011. Was it the White House or the Republicans in Congress?

Whoever it was, the point is that both sides assumed the measure to be so awful and crude that the need to avoid it would concentrate minds. It was a bit like setting the clock on a bomb with the assumption that watching it go off and dying would be less appealing than the compromises necessary to defuse it.

In theory. But then, no-one had calculated on the dysfunctional, partisan lunacy that is government in “the world’s greatest democracy”. Perhaps language is to blame. The term fiscal cliff was scary enough to make people sit up and listen. It conjured up the image of Uncle Sam going over the cliff like Thelma and Louise.

Sequestration is too wooly and complicated to make people sweat. Eyes glaze over when the word is mentioned. In a few weeks from now, they may well be glazed by tears, when America slips back into recession.

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One reader comment

  1. Andrew Dundas says:

    Let’s make it clear: they’ll be NO immediate cuts. The sequestration is a slow burning torch that only lights a little from the end of this month. Then Congress will have to await their constituents ‘phone calls and the opinion polls to learn just who their supporters blame. You can be sure Republicans are not going to fret over the pain of the unemployed. But upsets amongst the Military and its suppliers will be noticed.
    One of the real issues is the future of ‘earmarks’ – those little bits that provide nice little presents to Congressmen who support controversial measures. What other people call ‘bribes’. They’re part of the system of checks and balances that make up democracy in the USA.
    Maybe more and bigger ‘earmarks’ would help things along a bit.
    We’ll see!

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