- The Enterprise
- The Recorder
End sequestration? Not this fiscal year, U.S. Sen. Benjamin L. Cardin (D) predicted Monday.
Speaking to local businesspeople at the Waldorf West library, Cardin said intransigence in the House of Representatives will likely keep the reduced federal spending in force until at least Oct. 1. Republicans are unwilling to raise taxes, and Democrats are refusing to cut entitlement programs, like Social Security, enough to satisfy House extremists. The GOP-dominated House is therefore likely to draft a budget with no tax increases that slashes Medicare and other discretionary spending. Meanwhile, the Senate version, drafted by Democrats, will probably use tax increases and mandatory spending cuts in both military and civilian government programs.
Reconciling the two approaches will require a “grand compromise,” delaying the end to sequestration, a set of massive cuts to the federal budget, Cardin surmised. To make a deal, both parties will have to move toward the middle, with Republicans accepting some tax increases and Democrats accepting some painful budget cuts.
The budget cuts, which went into effect March 1, entail $85 billion in cuts, split between military and civilian spending, if it remains in effect for a full year, according to a statement from Cardin’s office.
Washington last balanced the budget 13 years ago. Since then, there were two rounds of “significant tax reductions,” two wars and a recession, forcing the government into year after year of deficit spending, Cardin said. But it can’t continue indefinitely.
“You cannot continue to spend and receive revenue at the disparity we have today,” he said.
The temptation of spending reductions, however they come about, is misguided, he continued.
“There’s a lot of us who want to substitute sequestration for rational budget cuts. Sequestration is not the way we should do business. It’s like you have a family budget and run into a tough time, have to adjust the family budget. You don’t have enough money. You got laid off. How are you going to deal with it?” Cardin asked.
A household might have a mortgage to pay, groceries to buy and hopes for summer vacation, he continued. Eliminating the vacation would be the prudent choice.
“You don’t cut them all equally. … The same thing should be true of federal spending. All spending is not equal. My point is these aren’t just get-rid-of-the-waste-type cuts. These are cuts that are going to hurt,” he said.
Still, this sequestration is not the “fiscal cliff” approached in December, which would have been even more drastic and involved steep tax increases, Cardin explained.
The cliff “would have thrown us, economists said, back into a recession. These cuts are more like a slope. You don’t feel them immediately,” but the consequences build over time, Cardin said.
Beacon Printing in Waldorf is already suffering, said co-owner Wayne Magoon, because military installations canceled contracts.
“I will tell you it’s not a slope for me. The phone rang on the third of March, and we fell off that cliff. We lost that business. Sequestration is affecting businesses and individuals in Southern Maryland,” said Magoon, who is also chairman of the Business Alliance of Charles County.
Businesses already have been harmed, Cardin acknowledged, especially by uncertainty. If firm rules were in place, even if they weren’t the best rules, businesses would adapt. But not knowing what’s coming causes companies to delay all forms of investment, including hiring, because they cannot know what types of investment would be prudent, Cardin said. He noted that government workers are suffering, too, with those furloughed at one day a week losing a fifth of their income as a result.
Joe Anderson, representing CSC, a military contractor in Lexington Park, worried that cuts in science spending would cause unemployed engineers and researchers to leave Southern Maryland.
“During the last rounds of BRAC, Southern Maryland made out pretty good. Made out very well, as a matter of fact,” Anderson said, referring to the Department of Defense’s periodic closure of military bases. “We have been told the Pentagon is recommending another round of BRACs in the next couple years. I think the longer this remains unsettled, the more we have at stake of playing with a different deck of cards when the next BRAC occurs,” because if businesses fail as a result of sequestration, intellectuals could move out of the area, making it a less attractive place to have military bases.
Cardin saw even more dire consequences, if broad science spending cuts drive talented researchers and engineers to seek work overseas, even in China.
“We are making ourselves more vulnerable than we should,” he said.
But to Chris Ripley, owner of Strategic Marketing Group in Waldorf, the military is the obvious place to cut, because America accounts for between 40 to 50 percent of military spending worldwide.
“Our government doesn’t think ahead at all to what it will be like in 20 or 30 years … leaving us in an incredibly poor competitive position for the future. We’re not investing in infrastructure like we should,” he said.
Major fields like health care are neglected, and American engineers are employed building new weapons instead of civil projects, he continued.
“The Chinese are building cities before they have people to go there” while existing American infrastructure decays, Ripley said. “When we think about innovation, we think about defense innovation: What’s the next weapon system?”
The military can be made more efficient, Cardin said, but shouldn’t be held responsible for the country’s budget woes.
“I don’t think the resources we put out for defense is responsible for us not having everything we need. … I can tell you this: There’s no country like America. It’s in our interest to maintain that type of edge,” Cardin said, prompting Ripley to assert his patriotism.
“I am not unpatriotic. I cry when I hear the national anthem sometimes,” he said, drawing laughter from the room.
Despite sometimes disheartening prognostications, Cardin ended the discussion on a cautiously hopeful note.
“I am convinced we will get there. I hope we get there sooner rather than later. I think there is a lot going on that will help us make decisions in the next several months. Not the next several years. The next several months,” he said.