Trade Secrets: The Repercussions of OverspendingMarch 11, 2013
Seventy-nine. That’s the number of times Congress has acted to either raise, extend or alter the definition of the U.S. debit limit since 1960—the most recent occurring in August 2011. As an attempt to resolve yet another debt-ceiling crisis, Congress passed the Budget Control Act of 2011, which increased the debt limit to more than $16 trillion. But this was merely a Band-Aid on a serious wound.
Not even a year and a half later, the debt ceiling was reached again. And as of December 31, 2012, under the Budget Control Act, across-the-board spending cuts were to go into effect if Congress was unable to agree to targeted spending cuts of similar size. And as we all now know, Congress failed to reach that agreement. And another Band-Aid, called the American Taxpayer Relief Act, was used as a partial remedy to the fiscal cliff that loomed at year’s end.
Fast forward two months later, and here we are at the beginning of the infamous Sequester of 2013, where $85 billion will be cut in both defense and non-defense budgets over the next six months—a means to undo years of government overspending.
This sequestration caused me to think about the necessity of fiscal responsibility. Beyond the walls of government agencies, what happens when a business cannot control their spending or budget properly? Businesses don’t dig themselves deeper into debt while simultaneously going on a spending spree without repercussions like layoffs, permanent shutdowns, downsizing or acquisitions. But the government can. And has—79 times.
The government can’t be acquired by a more efficient entity and they never have to sacrifice, with the exception of grandstanding temporary shutdowns. When a government agency overspends, Congress is there to clean up the mess. And of course, when this happens repeatedly, they’re pigeonholed into massive, across-the-board spending cuts that affect those who aren’t at the forefront of the blame. Now, there’s nothing responsible about that.
Sequestration will only serve to weaken the economy further, and have negative repercussions for our industry, which has been slowly gaining ground since the recession. Congress must recognize the importance of properly addressing not just sequestration, but also the overall financial strength of our country.
Government overspending is more than a scraped knee or elbow; it’s a serious injury that we all suffer from, and we cannot continue to cover it with a flimsy Band-Aid that falls off after a few weeks.
Tags: government overspending, sequester of 2013, Budget Control Act, American Taxpayer Relief Act, fiscal cliff, spending cuts