The Sequester is Here – BFD!*

The way to solve a problem is to attack the root cause rather than react to the current result

The dreaded sequester has landed on Washington and our leaders expect us to quake in our boots, as if it’s the “Mother of all Armageddons.” In reality, the term “sequester” comes from the Latin word that means: Small minds do small things. And the Beltway’s small-minded Democrats and Republicans are acting like a bunch of kids blaming one another for throwing the rock that broke the grumpy neighbor’s window.

It is all poppycock!

The Democrats, led by President Obama, are playing out the “sequester crisis” in a well-choreographed ballet of speeches, press releases and television appearances – all designed to cherry-pick the potential “catastrophic impact” of the required budget cuts. With a straight face they forewarn us of cuts to air obamaxtraffic controllers that could cause planes to crash willy-nilly into each other. They warn of a steep reduction of security personnel at airports, leaving us vulnerable to the sleeper-cells of crazed terrorists just waiting for this opportunity. We are told that teachers will be laid off and our children will grow up ignorant. There are grim forewarnings that soldiers fighting in Afghanistan will run out of bullets or that there will not be enough fuel for the Navy ships defending the homeland against attacks by the Iranian navy. We are told of babies who won’t be fed, the sick that won’t be healed, fires that won’t be fought and criminals who will run free, all the result of these calamitous sequester of budget cuts.

As for Republicans, they slink around Washington acting like the kid who encouraged a friend to jump off the garage using an umbrella as a parachute; then claiming it was all the friend’s idea and he had nothing to do with it. Republicans trumpet the sequester as Obama’s proposal that they had nothing to do with and have no way to stop it; all the while failing to mention that the sequester was the ransom they demanded for the release of the debt limit increase, being held hostage by the Republicans in 2011.

And now the Truth . . .

The reality is that this trumped-up crisis of cuts is being used to divert our attention away from the genuine financial issues facing the country. The sequester is being put into play because the leaders – yes, of both parties – are devoid of any overarching vision needed to solve the bona fide financial problems of the country. So they only know how to govern in reaction to the circumstances of the moment. The politicos claim they are acting only out of concern for the people, but the truth is that they care about people, just as sharks care about seals.

Let’s look at this debacle from a perspective that can teach us something that will be helpful in the real world. The federal budget for 2013 is $3.7 trillion dollars and is made up of two pieces: Mandated (required) spending ($2.5 trillion) such as Social Security, Medicare and payment on the national debt. The second slice of the budget pie is called discretionary (optional) spending ($1.2 trillion) and that includes expenditures for education, infrastructure, agriculture and military spending. (Military and defense spending accounts for 57 percent of the total discretionary budget.)

This sequester hullabaloo is all about eliminating $85 billion out of $1.2 trillion from the discretionary part of this year’s federal budget. A trillion dollars is 1,000 billion dollars, so the sequester is aiming to cut $85 billion out of a total of $1,200 billion. If you can’t find $85 billion of wasted money (especially from military spending) sloshing around in a bucket of $1,200 billion of spending, you are not trying very hard. To put it in terms we can relate to: If our family is spending $1,200 a year on discretionary items such as movies, eating out and sports, could we reduce that amount by about $85 dollars, without going into crisis mode?

The point here is that our “leaders” in Washington are (successfully) trying to divert our attention away from the big issues by making a big thing over little issues. We are witness to what happens when leaders lack both the vision and the courage to do the right things at the right time. When leaders are faced with challenging big issues, but lack a core strategic vision, they retreat to the solace and protection of tactical actions.

Easy Come, Easy Go Budgeting?

The problem is not the money we are spending – although there is certainly waste that should be cut – but the money we are spending is money that we don’t have. Tactical nickel and dime budget cuts will not solve the problem; they only delay facing the real problem. The truth is that these cuts are not only ineffective, but they are the wrong type of spending reduction. What is really needed is a resolution of the reason why we are spending more money than we have.

The mistake is that these cuts are coming out of the discretionary portion of the budget, while nothing is being done about the mandated expenditures: Social Security, Medicare, Medicaid, service payments on the federal debt. These massive, uncontrolled outlays are the real problems since they amount to twice as much as the discretionary spending. (If military spending is excluded, the discretionary spending as a percentage of the total budget has actually declined over the past decade.)

Will the Real Leaders Take One Step Forward?

For starters, a possible solution to cutting entitlements was offered in this recent blog. But the hard truth is, the real problem will not be solved until our leaders are willing to step up and face the fact that the mandated entitlement programs need fundamental reform and restructuring. In addition, the complicated sieve we MysteryLeadercall the “tax code” that favors special interests and the wealthy needs a complete overhaul. It may not be easy tackling these problems, but it can be done. At least a real leader – one with rock-solid principles and a well-defined vision for the future – would make the effort. But no such leader has emerged – certainly not in Washington. Sure, the leaders talk the talk of doing this, but when faced with the crisis of the moment, they discover it is easier to tell a teacher in Nashville to take a walk.

The whole situation reminds me of a similar real world experience that taught me a good lesson. I had been hired as chief marketing officer by ITT Life, a subsidiary of The Hartford. No sooner had I joined the company than a posse of outside consultants hired by Hartford, descended on the company. It seems that ITT Life had been performing poorly and in response, these outside consultants were charged with cutting the budget by 10 percent. For the next 90 days the company was paralyzed as these consultants burrowed into the company like termites, looking to feed on the 10 percent cuts. Everyone in the company was defensive and argued that such cuts would prevent them from doing their job. Once the reductions had been identified and implemented, the company went on as it had before, but the results continued to deteriorate. And that called for another round and yet another of cuts. And still company’s performance did not improve.

In the meantime, I had set to work implementing a complete restructuring of products, distribution and target markets for the company. As these changes began to have a positive impact on sales, revenue and profits (not that big a deal, since the company had been in such bad shape) we saw less and less of these outside consultants looking for cost cutting. In fact, in meetings with The Hartford, the subjects discussed shifted from how best to downsize the company to ways to further expand its operations. The point here – and what I learned – is that the best way to solve a problem is to attack the root cause, rather than react to the result.

We are fixated on this sequester, as we will be on the next one, because the leaders in Washington are making tactical decisions in reaction to the result of deficit spending and increasing debt, rather than developing and implementing a creative vision that will attack the cause.

And The Moral of the Story …

You can’t solve a systemic problem by taking tactical actions that react only to the result of a problem, but by going to the root cause of the problem and changing it. Short term tactical “fixes” simply delays the facing of the real problem that will get worse and worse.

When you see our leaders in Washington taking tactical approaches to solving long term functional problems, you can rest assured they do so because they lack the courage and the vision to do anything different. What we need to do is sequester the entire group; and if we don’t do that, they will sequester us to death.

*BFD If you’ve got to ask, then maybe it IS a Big Effing Deal

4 responses to “The Sequester is Here – BFD!*

  1. nice analogy

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