Friday, February 15, 2013

Sequester Madness

One would think this is obvious. When an economy is just starting to recover from a gruesome recession and high unemployment persists, the economy needs more investment. And if the private sector isn't investing enough, the public sector should step in and help. I mean, that's just common sense!

But apparently, there's little of that on Capitol Hill. Instead, some in Congress are actually cheering on the arrival of "The Sequester", another "Fiscal Cliff" that's loaded with budget cuts that will slow economic growth at the worst possible time.

Don't believe me? Believe Europe. The Eurozone (where the Euro is used as currency) has aggressively pursued fiscal austerity policies for nearly four years. And thanks to that, Eurozone economies are STILL mired in "The Great Recession".

[2012] marked the currency bloc’s first full year in which no quarter produced growth, extending back to 1995. For the year as a whole, gross domestic product (GDP) fell by 0.5 percent.

Economic output in the 17-country region fell by 0.6 percent in the fourth quarter,EU statistics office Eurostat said on Thursday, following a 0.1 percent output drop in the third.

The quarter-on-quarter drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4 percent drop in a Reuters poll of 61 economists.

And this is where America is headed if Congress allows "The Sequester" to fully kick in. The Bipartisan Policy Center recently released a study showing how "The Sequester" will cost America 1,000,000 jobs (!!!) if implemented. What's so idiotic about this is that it means 1,000,000 more people who need unemployment aid. And this means 1,000,000 people who can't fully participate in the consumer marketplace. And of course, that means a major lost opportunity for economic activity & growth.

One of the most potentially devastating facets of "The Sequester" is the planned cuts to research & development (R&D) in our higher education institutions. Just take a look at what's at stake if we take "The Sequester".

National investments in R&D as a percentage of discretionary public spending are down to around 9 percent today from a high of 17 percent in 1962, and the automatic cuts looming in the sequester threaten an 8.4 percent reduction to discretionary spending programs across the board. When you take into account non-discretionary and discretionary spending, total R&D cuts from sequestration over the nine year period will amount to $95 billion.

These cuts will hit universities especially hard because academic institutions perform a huge amount of the research that drives our economy, doing 53 percent of total basic research and 36 percent of all research funded by the U.S. government in 2009. But the $95 billion figure doesn’t reflect the true damage the cuts will have to the U.S. economy because of the exponential impact innovation has in driving our economic growth. A report released last September by the Information Technology and Innovation Foundation estimates the sequester’s R&D cuts will reduce GDP by between $203 billion and $860 billion over nine years, and result in 200,000 job losses in 2013 alone.

While the economic impacts could be devastating, looking beyond the numbers, it’s almost impossible to calculate the value add of innovations fueled by federal R&D funding in the U.S. and how many of them —such as medical treatments, the internet, or cell phones —have fundamentally improved or saved the lives of millions.

These "Sequester" cuts will especially be felt here in Nevada, as UNLV, UNR, and other public colleges here have already endured painful state budget cuts. With the loss of federal funds, they will have to cut even more R&D. At that means even more of a gut punch to our still weak economy here. And not only that, but it also means much less of the kind of critical investment in our people that saves lives and improves the quality of our lives.

This is what Nevada and the nation stand to lose if "The Sequester" is carried out. Perhaps Mark Amodei wants to inflict this kind of painfully unnecessary "drama" on his own constituents, but do Dean Heller and Joe Heck? Do they really want more out-of-work Nevadans and less of the very R&D that our state so badly needs?

Do they really want to take their queues from Paul Ryan, the "tea party", and the architects of The Eurozone's disastrous austerity program? Or will they listen to Nevada working families expecting better from Congress? Can't they just reach out to Harry Reid and recognize that he and other Congressional Democrats are ready and willing to strike a deal ASAP to stave off this counterproductive "Sequester"? It's time to stop this EPIC FAIL of a fiscal fiasco before it wreaks any more havoc on our economy.

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