Saturday, November 24, 2012

How much will Sequestration reduce the US Federal deficit?

Unless the lame duck Congress acts, a series of automatic budget cuts, part of the Budget Control Act (BCA) and called "sequestration," will go into effect.  The (left-wing) Center for American Progress calls these budget cuts "draconian."  Former Secretary of Transportation Norm Mineta calls the sequestration cuts "devastating."

One might think that such devastating and draconian cuts would solve the problem of skyrocketing US debt.  No such luck.  Using numbers from the Bipartisan Policy Center, Veronique de Rugy has plotted what the publicly-held Federal debt, as a percent of GDP, would look like, both without ("pre-BCA") and with ("post-BCA") sequestration.  The difference is not large:

The dotted lines in red mark when the publicly-held Federal debt reaches the danger level of 100% of GDP.  Sequestration delays that mark by just two years.

The underlying problem, of course, is that sequestration does nothing to fix the entitlement mess.

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