Sam Uretsky

Wrong Money Was Cut By Sequestration

There are two problems with the sequester — three if you’re scratching your head and wondering how we let a verb turn into a noun without discussing it. First, we shouldn’t be cutting government spending at all. Just as the Federal Reserve is trying to stimulate the economy by keeping interest rates low and buying $85 billion a month in mortgage backed securities, we should maintain federal spending levels until unemployment drops to a more acceptable level. When the economy picks up, and corporations start expanding and spending money, that will be the time to cut back on federal expenses..

The other problem is that the sequestration (that’s a noun) isn’t targeted. Aside from a few mandatory programs such as Social Security and Medicare, no “program, project or activity” is exempt, and every account has to be cut at the same rate, 13% for defense, and about 9% for non-defense discretionary items. This affects items that were over-budgeted, but also those which have been starved for funds for years. There are plenty of areas where budget cuts would be perfectly okay, but every congressman has an interest in protecting jobs or pleasing a political donor or blocking a potential political opponent.

In 2010, the Washington Post published the results of an investigation into the nation’s intelligence establishment. They reported “Some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security and intelligence in about 10,000 locations across the United States.” The Post report also said “Many security and intelligence agencies do the same work, creating redundancy and waste. For example, 51 federal organizations and military commands, operating in 15 US cities, track the flow of money to and from terrorist networks.” Right now, nobody really knows how much money the United States spends on espionage and counterespionage each year.

Our health care establishment is equally inefficient. The 2010 World Health Report of the World Health Organization (WHO) concluded that 20 to 40 percent of all money spent on health care is wasted – meaning that it doesn’t go to the actual delivery of medical care. In 2008, the National Bureau of Economic Research published a report titled “”Is American Healthcare Uniquely Inefficient?” The authors wrote “Although no country can claim to have eliminated inefficiency, the US has fragmented care, high administrative costs, and stands out with regard to heterogeneity in treatment because of race, income, and geography. The US health care system is also more likely to pay for diagnostic tests, treatments, and other forms of care before effectiveness is established and with little consideration of the value they provide.” The paper is wonkish, but has a number of valuable statistics including “The percentage of chronically ill patients who reported they eschewed doctor or nurse visits or recommended treatments, or prescription drug doses, because of costs ranged from 42% in the US to just 5% in the Netherlands.” A 2011 study by the Institute of Medicine put the dollar figure on wasted money at $765 billion for 2009. Obamacare will provide insurance for more people, but as long as the insurance companies have their way, it won’t make major improvements in efficiency.

The amount of waste in the enormous military budget is unknown, and won’t even be subject to review for a long time to come. The Department of Defense has been mandated to develop a system of accounting whereby its expenses could be audited, and have the system ready by 2017, but a Government Accountability Office report in 2010 found that the upgrades in the accounting system were themselves experiencing billions in cost overruns, and of the nine systems being put into place, six are running behind schedule by 2 to 12 years.

There is no such thing as a perfectly efficient organization, and the size of government makes it inevitable that the amount of waste will be dramatic. Even so, the sequester, which is intended to cut federal expenses by $85.4 billion in 2013, with similar cuts in subsequent years, is dwarfed by what could be saved with improvements in efficiency. Most of the inefficiency has a political constituency, like the Republican insistence that Medicare part D plans not be allowed to negotiate drug prices. The Pentagon almost routinely proposes base closings or reductions in weapons programs, only to find that politicians of both parties fight to retain needless expenses as long as they’re in their district. In a short report, William D. Hartung, Director of the Arms and Security Project at the Center for International Policy identified simple cuts that would trim the military budget by over $50 billion per year, but for every cut, there will be a congressman standing in the way. The DoD has a knack for proposing cuts that it knows will be blocked.

Here’s a simple proposal: any member of Congress who wants to advocate cutting the deficit must recuse themselves from speaking or even voting on cuts that affect their own districts. Proposed cuts will be put to a simple majority vote, starting with the largest and working down. Since every Representative will push to reduce costs before the vote gets to their districts, we could have a balanced budget for Christmas.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@ mail.com.

From The Progressive Populist, May 1, 2013