Wednesday, February 27, 2013

The Absurdity of the Sequester Crisis

What do you think is the single biggest problem with government today?  I know that is an open-ended question that could generate pages of responses since there are so many clear problems with our government. But as I have watched and lived through the massive regulations of the past four years, I have come to believe that the biggest problem with our government is that we have two sets of rules--one for politicians and the other for everybody else.

Two days from now, the sequester is about to go into effect which will cut $85 billion over 10 years from a budget that will still be larger than the federal government's 2012 budget.  I have spent the last few days watching and reading various commentaries on the sequester--ABC News reports that the sequester will lead to longer lines at the airport, cuts to Head Start, cuts to education, cuts to defense, and on and on.  A few days ago, the Administration released non-violent illegal immigrants awaiting hearings to drive home the consequences of budget cuts to federal law enforcement.  Much of this is an obvious attempt to create a public outcry against the government being forced to cut its budget by 2.3%.  Unfortunately for Washington, no outcry is coming.  The American people are fed up--we simply don't care that it's finally the government's turn to make do with less money than it would like to have.

I have also read some excellent commentaries on the fact that the all Americans were subjected to a 2% payroll tax increase in January of this year, so we all have to make do with 2% less money than we had last year.  Yes, agencies may not be able to hire so many employees; yes, they may have to furlough employees.  So what?  Government workers earn an average of 16% more than workers in the private sector.  In a climate where many businesses are struggling and millions of Americans remain unemployed, no one is going to shed any tears over a federal employee being furloughed.  At least they have an excellent job to go back to as soon as the furlough ends. 

Another possibly horrific consequence of the sequester--Congress might not be able to travel free on military jets as a result of defense cut spending.  According to Air Force Secretary Michael Donley at the Air Force Association's Winter Conference, the reduced military budget might not allow for free transport of Congressmen and women.  That would truly be sad--they might have to fly business class where they would stand in the lines created by TSA and sit next to their own constituents during flights to and from their districts. This might, however, have the positive effect of increasing business class air travel if people knew that they might actually have an opportunity to speak face to face to their elected representatives since anyone who has ever lobbied on a grassroots level knows that these people are virtually impossible to contact directly by phone or email and often do not see visitors from their districts who travel to their DC offices to meet with them.

What is hypocritical about the weeping and wailing over the cuts brought on by the sequester is that the same government officials who are warning that the Apocalypse is about to begin have spent the last four years imposing draconian regulations dictating how much private businesses can earn.  In the mortgage industry, for example, two years ago the government implemented regulations mandating that a self-employed loan originator could no longer be paid both by the consumer and by the lender to whom he sold the mortgage loan. At that time, many experienced originators left the market, because the government had cut their pay.  Last year, the government again cut the pay of originators--this time indirectly--through ruling against Wells Fargo in a discrimination case.  In that case, the government determined that because some brokers had charged higher fees to some minority borrowers than had other brokers, Wells Fargo's policies, while not intentionally discriminatory, had a "disparate impact" on potential borrowers and therefore Wells Fargo was guilty of discrimination. The immediate effect of this ruling was that many lenders (including Wells Fargo) stopped working with independent loan originators completely, and those who remained changed our contracts effectively reducing how much we can earn once again.  Now, in January, the CFPB announced its new rule federally capping all fees on qualified mortgages at 3% in a move that will finish destroying what is left of the independent mortgage market. 

All of these regulations were touted as necessary for the protection of the consumer.  Mortgage brokers were apparently charging too much money and their customers did not understand the hundreds of pages of forms provided to them to explain their costs and fees.  In order to protect the consumer from being overcharged, the new regulations had to be implemented.  No one ever protested, "But mortgage brokers with many years of experience have financial obligations--homes, mortgages of their own, children in school, debt, office expenses, payroll, etc. They have entered into those obligations based on past earnings. If we cut their incomes how will they meet those obligations?  How we can expect them to do the same level of work they are doing now for substantially less money?  What if they can't earn enough money to meet their expenses and they are forced into bankruptcy or foreclosure?"  Rather, the bureaucrats who made these rules were smugly confident that what they were doing was for the greater good.  The businesses they affected would just have to learn how to make do with less.

Now, it's the government's turn to experience some cuts--cuts they imposed on themselves, apparently thinking that when the time came they would never have to actually live under them.  President Obama believes that the American public should rush to the government's defense and accept more tax increases--further reductions to our own income--in order to prevent any reductions to the government's budget.  To make his case, he calls the cuts "brutal" and "severe" and warns that they will "eviscerate" key segments of the economy.  In doing so, he is using the same reactionary strategy that he has successfully used several times in the past--the world is about to end, the wolf is at the door, and we are all going to die unless we acquiesce.  Apparently, Obama never read the story of the boy who cried wolf or he would know that this particular strategy only works so many times before the people stop listening.  I think that's where we are today.

While the mainstream media and the government want to pretend that a 2.3% reduction in the federal  budget will mean the end of the world as we know it,  the truth is that it's time the government learned how to adjust its spending and live within its means.  If that means some pain for the agencies and employees, so be it.  We the people need to let Washington know that the cuts imposed by sequester are necessary for the protection of the taxpayer--we are doing it for the greater good.  The government will just have to learn how to make do with less.

Alexandra Swann is the author of No Regrets: How Homeschooling Earned Me a Master's Degree at Age Sixteen and several other books. Her novel, The Planner, about an out of control, environmentally-driven federal government implementing Agenda 21, is available on Kindle and in paperback. For more information, visit her website at

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