Washington, D.C. is all abuzz about the deadline for the automatic budget cuts ($1.2 trillion), aka (also known as) the Sequester (eek!) to kick in at 11:59 pm tonight. They were supposed to start at the beginning of January but the President postponed them until now figuring they would SURELY be able to reach a deal by now….Wishful thinking! (the President wants to tax the rich and the House of Representatives wants to cut spending) So what’s the big deal? Well…for us common folks if Congress and the President don’t reach a deal about how to “balance” the budget, the computer program which regulates automatically the way money is distributed in the US from the military, to Social Security, to federal school grants will begin to reduce these budgets by at least 5%…across the board indiscriminately without choosing which programs contain a lot of fat and which programs need to be kept because reducing their budgets would hurt “the little people” (the less fortunate and less wealthy) among us. Everyone knows that the US is a “debtor” nation…we live way beyond our means…the nation’s debt-to-GDP ratio is close to 70%…but everyone’s been “kicking the can down the road” thinking that the next generation will solve our problems…or our spending craze. But if we let the sequester take place, Washington will be cutting “fat” (wasteful spending) and “muscle” (military, education, transportation, etc.) where it’s going to hurt. All of these cuts are going to reduce GDP (our Gross Domestic Product) by about 0.5% this year. That means that Wall Street will react (business confidence) and that will ricochet on small businesses who do business with the government (government contracts) who will probably hire fewer people, spend less and maybe even…(gulp)…lighten their fiscal load by restructuring (laying people off). But to keep people onboard in federal agencies, workers will be asked to take “furlough” days (unpaid days off).
This is especially bad for states like Texas and California where a lot of high tech and aerospace companies are located: Lockheed Martin, Boeing, Raytheon, United Technologies and Northrop Grumman.
All this doomsday talk sounds like what we heard before the year 2000 when all the techie geeks kept telling us that the world would come to an end on Dec. 31, 1999 at midnight! So hold on, we ain’t seen nothin’ yet!! (or in more ‘proper’ English: we’re not at the end of our troubles or we’re not out of the woods yet!!)