Mises Wire

Home | Wire | Sequestration Math

Sequestration Math


The media are bombarding us with stories of how sequestration, with its "drastic cuts" in government spending, will affect our lives. Marketplace ran one yesterday about the USDA and the potential loss of federal meat inspectors. Don't worry, we were told, the authorities won't allow tainted meat on the shelves! But they might inspect more slowly, meaning less meat for sale, and higher prices.

Not being a reporter, I thought it would be useful to collect some facts. So I spent 5 minutes on the CBO website and discovered the following. The USDA spent $145 billion in 2012. Its proposed budget for 2013 was $155 billion, a 6.9% increase. Of that, $128 billion is considered "mandatory" spending — e.g., payments to farmers based on a formula — and isn't affected by the sequester. What's in play is $27 billion of projected "discretionary" spending. The sequester cuts that by 8% to about $24 billion. So the sequestered 2013 budget is $152 billion, a 4.8% increase over 2012.

Man, that is one savage cut!

Peter G. Klein is Carl Menger Research Fellow of the Mises Institute and W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University's Hankamer School of Business.

Add Comment

Shield icon wire