Borrowing a page from H. Ross Perot
Many of us will never forget the 1992 Presidential campaign when H. Ross Perot ran as an independent candidate. What I remember most is how he made copious use of charts and graphs. I don't normally use them in my blogs, but I'm going to use one today to make a point.
That's right friends, this is what all the fuss is about. An amount equal to only 2% of the total Federal Budget. 2.23% if you want to be specific.
The White House just said that 64,000 defense jobs in California might be lost as a result of these cuts. If those jobs cost the Federal government an average of $50,000 per person, including benefits, that's $3.2 billion just here in CA. But let's be more conservative and say $40,000 per person. That reduces the hit to only $2.5 billion. In one sector in one state.
Seems reasonable. Until you take that $2.5 billion out of the state's economy and ponder how many more jobs will be lost because those people won't have that money to spend on food, gasoline, rent, clothing, entertainment and more. When I was in the service, the base commanders used to tell the local communities outside the gates of our bases that every dollar that base personnel were paid translated into several dollars for the local economy. So will CA take a $2.5 billion hit just in defense jobs? Probably not. It will be higher.
However, bear this in mind. If we were to just spend this extra $85 billion and add it to the national debt, 30 years from now it will have cost us $64 billion in interest expense at 2.5% per annum and we will still owe the $85 billion that we just had to spend and therefore borrowed.
Will sequestration kill the U.S. economy? No. Not right away. There will be pain and in some sectors of the population it will be very difficult to bear. But we're in a bad way already. We have no solutions on the horizon. We can tax and spend, borrow and spend, or cut spending while raising revenues. The first two haven't worked yet. The third remains untried.
Something has to be done.
That's right friends, this is what all the fuss is about. An amount equal to only 2% of the total Federal Budget. 2.23% if you want to be specific.
The White House just said that 64,000 defense jobs in California might be lost as a result of these cuts. If those jobs cost the Federal government an average of $50,000 per person, including benefits, that's $3.2 billion just here in CA. But let's be more conservative and say $40,000 per person. That reduces the hit to only $2.5 billion. In one sector in one state.
Seems reasonable. Until you take that $2.5 billion out of the state's economy and ponder how many more jobs will be lost because those people won't have that money to spend on food, gasoline, rent, clothing, entertainment and more. When I was in the service, the base commanders used to tell the local communities outside the gates of our bases that every dollar that base personnel were paid translated into several dollars for the local economy. So will CA take a $2.5 billion hit just in defense jobs? Probably not. It will be higher.
However, bear this in mind. If we were to just spend this extra $85 billion and add it to the national debt, 30 years from now it will have cost us $64 billion in interest expense at 2.5% per annum and we will still owe the $85 billion that we just had to spend and therefore borrowed.
Will sequestration kill the U.S. economy? No. Not right away. There will be pain and in some sectors of the population it will be very difficult to bear. But we're in a bad way already. We have no solutions on the horizon. We can tax and spend, borrow and spend, or cut spending while raising revenues. The first two haven't worked yet. The third remains untried.
Something has to be done.
posted by me at 2:36 PM
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