Wednesday, March 27, 2013

DELAYING THE INEVITABLE IMPACT OF THE SEQUESTER

IT SEEMS THE DEFENSE DEPARTMENT, in particular, and the Federal government as a whole may be setting itself up to do an even greater disservice to their employees, amplifying a hurt that is already being caused by the Sequester.  The Sequester, of course, is the self-inflicted wound Congress has visited upon America by the conservative Republican and Democratic refusal to compromise on a way forward to reduce the budget deficit.

This irony results from a potential two-week delay in beginning of employee furloughs the Defense Department wants to institute while it reviews the stop-gap budget just signed into law for a  additional funds to pay workers.  The unintended consequence is that at this point in time, the Department of Defense (DoD) is required to furlough its employees for 22 days between now and the end of September; that would require workers lose one-day of pay per week, a 20% cut.  If the furloughs are delayed, that could mean a 40% cut for some weeks because now, to meet the 22-day requirement if additional funds are not found, workers will be laid-off two-days in some weeks.  The delay also throws a wrench into any plans employees might have had to find supplemental work to make up for the lost wages.

For the rest of the Federal government, it seems their fate has been delayed somewhat as well.  The Office of Personnel Management (OPM) could have sent out the 30-day notices of intent to furlough shortly after the Sequester became official in March.  Instead, they are waiting until April 5th to send out notices.  That means lay-offs can't start now until early May, leaving employees only five months to absorb a years worth of pay reductions.

Not Good!

Tuesday, March 19, 2013

SEQUESTER, WHAT SEQUESTER?

AS MY FIRST SHOT AT A REAL BLOG on current events, I hope you don't mind if I start with the "Sequester", those nasty automatic spending cuts that were never supposed to happen because, in the end, Congress would find a way to be responsible and do what the Constitution's framers intended them to do - compromise, and come up with a solution.  By now, everybody should know they "screwed the pooch", whatever that means, and allowed the Sequester to occur.

For those who don't know, the Sequester (yes, I am using it as a proper noun) required across-the-board 10% cuts in virtually every federal government program on the books.  Granted, a few discretionary and most non-discretionary programs were spared, nevertheless, most of government will feel its effects; to the tune of $140 billion per year.  So, what are those effects?

First, imagine what the impact would be on your household budget if you had just sustained a 10% cut in pay; this shouldn't be too hard to do if you were one of the many unlucky ones to have exactly that, or worse, happen during the Great 2008 Recession.  Well, you say, the federal government's budget isn't like mine, its is full of waste, fraud, and abuse.  Therefore, there is plenty of room to cut without hurting anything.

Let me suggest that it is a very rare person or family indeed that doesn't have their share of waste, fraud, and abuse (WFA) in their own household budgets, for example, cigarette smoking; alcohol consumption; driving one block instead of walking; or frequent, unnecessary trips to the store.  WFA is ubiquitous in all organizations and institutions, no matter how big or how small, or whether they are public or private. That may be so, you counter, but there is a lot more of it in the federal government.

I worked as a civil servant for 20 or so years with the Department of the Air Force as a cost analyst; most of my time was spent looking at how the Air Force, and its contractors, spent money for operations and maintenance of everything from air bases to airplanes.  Did I find examples of WFA?  Of course I did.  Was I overwhelmed by the scope of it?  Nope, I wasn't; most of it was your normal run-of-the-mill waste and abuse; the big stuff, like the $2 billion JP Morgan lost through poor oversight of a trader, is pretty rare.

My point, therefore, is that the cuts the feds are going to endure will be painful and it will effect the service they deliver to the nation.  How painful? You be the judge.  From an article by Gen. Janet C. Wolfenbarger, Commander, Air Force Material Command (AFMC) at Wright-Patterson AFB near Dayton, OH (I spent many, many months there over the course of my career) we find her planning staff believes the following will happen between now and the end of the fiscal year in September 2013:
  • lose $300 million or 29% of their remaining operating budget
  • Reduce sustainment operations by 40% at Hill AFB, UT; Tinker AFB, OK; and Warner-Robins AFB, GA
  • Defer maintenance on 297 aircraft and 197 engines at those same three bases
  • Reduce civilian working hours by 20%, meaning a 20% cut in pay for these folks
Elsewhere, the Navy has already cancelled 11 maintenance contracts in Norfolk, VA; in fact, the defense industry has been in decline since the third quarter of 2012 as the Defense Department started preparing for the possibility of the Sequester.  Defense contractors accounted for $316 billion last year, so somewhere around $31.6 billion in cuts is going to have to come from that sector alone.  Now, expand that over the rest of the Federal government, defense and non-defense, until you have reached $140 billion, and you should get an idea of what is coming.

Why haven't we seen any evidence of this yet, you might ask. and that is a very good question.  Actually, there is some evidence, depending on where you live; Norfolk, VA, for example, is definitely feeling the pinch, but nationwide ... we aren't there yet.  I suspect by mid-April, the news media will start reporting problems.

The reason this delay in response might be true is it won't be until mid-April when federal employees will be furloughed in large numbers.  But, when it happens, it will be felt all across the country, not in just a few locations as is currently the case.  The same will be true of federal contractors as well (who out-number federal employees, by the way).  It will be at then, when real people start losing or cutting back real jobs, is where the economy will begin to slow because all of these people will stop spending.  Even worse, the cost to tax payers goes up because unemployment benefits also begin to increase.

But, even before this occurs, the purchase of supplies and travel will stop, which is probably happening now, meaning airlines and hotels may be seeing a decline in business travelers; their main income source.  However, because quarterly reports haven't been published yet, the evidence of a slow down is hidden there as well.  It is rare there is anything quick about the economy because it has a huge capacity to absorb adversity and keep on ticking.  It will continue to work, just less and less well, until it reaches some threshold where it collapses, like at the very end of 2008.  A major question then is will the effect of the Sequester be substantial enough to drive the nation into such a recession, or will it be limited to a significant decrease in growth or maybe a few quarters of negative growth.  My personal opinion is the latter case will be true.

In any case, the jury is still out on what impact the Sequester is going to have, but that shouldn't last very much longer, maybe another 30 days.

Monday, March 11, 2013

POLITICAL DEFINITIONS - A NECESSITY

I HAVE FOUND IN MY POST TO HUBPAGES that we (my commenter's and I) often talk past each other because when a word such as "limited", as in limited government, is used, it will mean different things to different people, often driven by their particular political persuasion.  There is often as much discussion about the meaning of certain terms in an article as there is about the Hub itself.  Consequently, before I get too far down the road in writing blogs, I would like the reader to understand where I am coming from.  So, let's begin.

I would like to cover one concept and six terms; the ones I think are very frequently used and most often understood in different ways by people talking to each other.  The purpose, assuming I build up any readership, is to give people a reference to go to when I use these terms in my posts, for this is what these concepts and words mean to me.  They are: 1) the U.S. Constitution, 2) "limited", 3) conservatism, 4) socialism, 5) liberalism, 6) Austrian economics, and 7) Keynesian economics 

U.S. CONSTITUTION:  This is the "contract" between the People of America and the various governments (state and federal) which make up the "more perfect Union".  Many people, especially those leaning to the Right, think the Constitution is an agreement between the central government and the constituent states that comprise the Union.  Even a cursory review of James Madison's notes to the Constitutional Convention will reveal the former interpretation is the correct one.

"LIMITED" GOVERNMENT:  When Madison, Jefferson, Adams and many of the rest spoke of limited government, they spoke of it in terms of two main ideas, none of them particularly concerned size (although that was mentioned as well).  When I speak of "limited", it is in reference to the relationship of the States to the Federal government and the relationship between the People and the Federal government.

CONSERVATISM: This is a philosophy that which emphasizes rights of class, be it royal, economic, gender, or other over that of individuals; it is a philosophy that would think the economic system should be constructed to support the political system.  Conservatives think that change, if it happens at all, should happen slowly and be based on only on tradition.  They refute the idea of a "social contract" between the People and the government, instead conservatives substitute a "contract" between themselves and God. Conservatives believe the purpose of government is to protect the rights invested in the "upper" class from incursion by those below them.  This implies that social and economic mobility is a foreign concept.

SOCIALISM: Like conservatism, socialism does not believe individual rights are more important than Class rights, especially the working class or proletariat.  Socialism also asserts that the economic system should drive the political system.  While socialist think there are inherently two classes, the "Haves" and the "Have Nots", they see ultimately see no need for Class at all because the political system will ensure wealth and resources will be distributed based on the value and contribution to society of the work performed. 

LIBERALISM:  Unlike to the other two systems, Liberalism is all about the individual and while recognizes they exist, oppose Classes of any sort (in theory anyway - I am not sure what Locke and the others of the "enlightened" period thought about women, but they certainly weren't part of the plan then.)  The goal of liberals is to ensure as much freedom of action of individuals as possible within the constraints of the contract they agreed to in forming a government. Liberalism is a political system, not an economic one.  Nevertheless, an economic system, capitalism, flows naturally from individual liberty.

There are two branches to liberalism.  One is active state liberalism (ASL) and the other is minimal state liberalism (MSL).  In today's parlance, ASLs are often called Socialist, which they definitely are not while MSLs are called Conservatives, which is antithetical to liberalism.  While each approaches individual rights in a different way vis-a-vis the role of the federal government, their common frame of reference is still individual rights.

AUSTRIAN ECONOMICS: I will use this term in reference to the economic system preferred by both Conservatives and MSLs.  While Austrian economics is only a subset of the adherents to this broader version of economic theory, it nevertheless is associated with the kind of economic system preferred by those on the Right; one based almost solely on the Law of Supply and Demand.

KEYNESIAN ECONOMICS:  This brand of economic theory accepts the supply and demand theory, but doesn't believe that theory alone can explain historic economic booms and busts.  Under Keynesian economics, again a well-known term covering many variants, presumes there are other, broader aspects of economic behavior that influence the economic cycles and that the boom-bust cycle can be mitigated by federal intervention.  This is the theory promoted by ASLs, but not socialists.

I will leave this article at that, given its purpose.  These definitions have prompted much discussion in my previous hubs but that discussion is swamped by the political discourse which has been arguing about it now for over 200 years.


Sunday, March 10, 2013

HELLO FELLOW BLOGGERS!  I haven't a clue as to how sites likes this work, so bare with me as I feel my way around.  I have done most of my writing on Hubpages at myesoteric.hubpages.com, under the pen name of My Esoteric.  But in reality, my name is Scott Belford.

Some may ask, the curious will anyway, why start this blog, aren't I happy on Hubpages?  Yes, I am but the kind of writing I present on Hubpages isn't really suitable for blog-type formats, or at least what I think blog-type formats are.  My topics on Hubpages are varied, covering current politics, religion, the physical sciences, economics, American political history, and so on.

For this blog, initially at least, I will provide opinions on current political events with and eye toward comparing and contrasting the various sides to an issue.  As you read, you will probably think I am a far-Left liberal if you are on the Right-side of the political spectrum; if you are on the Left, you will most likely think I am a conservative, maybe not a far-Right, but conservative nevertheless.  This means, of course, I am a moderate who can see, I hope, both sides of an issue; that is my goal anyway.

If you read my hubs, you will probably notice I am somewhat long-winded, or worded, a habit I will try overcome on this blog.  If you wish to know more detail about me, I have a profile at http://myesoteric.hubpages.com/

I hope what you find is entertaining, educational, thought provoking, but above all else, interesting.

Scott Belford aka Moderate in the House.