I’ve said it before and I’ll say it again: We shouldn’t fear the spending cuts under sequestration. This chart once again puts the Budget Control Act’s sequester into perspective by illustrating its effect on public debt, using data from the CBO’s projections of debt held by the public over fiscal years 2012 to 2021.
As you can see, the automatic sequester cuts do very little to the overall trend in the growth of debt. Under current law, according to CBO projections, public debt will reach nearly $14.54 trillion by 2021. Under sequestration, it is projected to reach $14.38 trillion, a rather minute difference of $153 billion.
The United States was downgraded by S&P in August for failing to take the steps necessary to change our financial path. Unfortunately, sequestration cuts wouldn’t change much about our march to more and more debt.
But here is what makes me particularly grumpy: The American people can’t even count on this tiny debt reduction, because it is unlikely that Congress and the president will let the sequester cuts be implemented — in other words, you can pretty much forget about the red bars. Of course, even the blue bars are rosy projections of our debt levels, since they assume that the spending cuts in the health-care bill will happen and that Congress will let the spending caps in the BCA work, among other optimistic expectations.
Now, it’s time for Congress to get serious about overspending and get to work (hope springs eternal). This failure gives lawmakers an opportunity to do the right thing and implement the fiscal reforms that could change the path we are on: That’s entitlement and tax reforms. And of course, because I always want more, I would appreciate if they could get moving on institutional reform too.