Sequestration and Vermont’s Budget

by Robert Maynard

As Congress and the White House get set to lock horns over our nation’s spending crisis, some here in Vermont are worried about the impact that potential budget cuts could have on our state.  If a deal cannot be reached, a process called “sequestration” kicks in and automatic cuts are made.  The problem is in defining “cuts”.  In a Real Clear Politics video U.S. Senator Rand Paul describes the verbal gymnastics needed to call what may happen “cuts”: “I voted against the sequester because I didn’t think it was enough. The sequester cuts the rate of growth of the spending, but the sequester doesn’t even really begin to cut spending, which we have to do or we are going to get a credit downgrade, another credit downgrade.”

Only in the surreal world of politics is a slowing in the rate of spending growth called a cut.  If you planned to spend $100 above what you had been spending, but only spent $50 more than you were already spending, it would be delusional to declare that you had cut your spending by $50.  The fact of the matter is that you have increased your spending, just not by as much as you had intended.  This is what happens in politics through a process called “baseline budgeting”.  Basically you start with a baseline of intended spending and call any amount spent less than that baseline to be a cut.  In other words, you don’t measure your future spending against your current spending to determine if your are actually cutting your spending.  You measure it against a “baseline” wish list of what you would like to spend.

The only honest way to measure spending cuts is through a process called “zero based budgeting.”  This is the way normal people do it.  A spending cut is defined as spending less than you currently are.  There have been numerous proposals over the years to adopt a more same way of measuring spending, but none have ever made their way through the political process.  In today’s political climate, to bring such things up is to be labeled an “extremist”.

To sum things up, the dreaded “sequester” that will happen if an agreement is not reached between Congress and the White House will only slow the growth of spending.  Rand Paul is right, even the supposed Draconian cuts that would happen are not of sufficient magnitude to effectively deal with our spending crisis.

Given this reality, how are our political leaders in Montpelier reacting to the possible impact on Vermont?  The follwing story from Fox 44 News gives us a clue: “The Shumlin Administration also says they’re concerned sequestration could really hurt the nation’s and Vermont’s economic recovery. And cause even more problems for the state budget.”

The notion that a modest dose of fiscal sanity would “cause even more problems for the state budget” is an understatement.  We have been looking at the federal government as a jolly old Santa Claus who is going to deliver the support needed to enact a series of costly proposals favored by the current political leadership, with the most obvious example being Green Mountain Care.  Someone needs to tell Governor Shumlin and company that the problem lies not with the phantom cuts coming from a possible sequester, but the Fantasy Island approach to running state government.  Absent hearing from a significant number of Vermont voters, Shumlin and company are not likely to listen.  As the old saying goes “politicians see the light when they feel the heat.”

One thought on “Sequestration and Vermont’s Budget

  1. The current issue of Barrons Magazine has an op-ed by Gene Epstein on what steps the US needs to take to avoid problems resembling Greece’s. Vermont’s plans to raid the Federal pantry seem wholly unrealistic. The USA can’t continue to borrow 40 cents in order to mail a dollar to Vermont.

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