Who’s Afraid of Sequester?

As I’ve stated for weeks, I believe we will indeed hit the draconian automatic-federal budget-cuts that are set to take place on Friday, March 1, 2013. I thought rather than buying into the hype, we should examine the facts. First and foremost among those facts, which like gravity are indisputable, is that after the sequester hits our bloated government will still be spending $15 billion more this year than last year. Let me repeat – AFTER the sequester we are set to spend more, not less. This would indicate to most that there is NO BELT TIGHTENING whatsoever in the sequester!

When the government has automatic spending increases built into the budget, which according to my calculation is $100 billion, then the $85 billion in cuts still leaves you with an INCREASE of $15 billion! So, please Mr. President, please Leader Reid, please Speaker Boehner, don’t feed us the garbage that we will lose the protection of the greatest military on earth. It makes each of you look dumber than usual.

This sequester has been heading at us for more than a year. Yes, Congress pushed it back to March 1st as part of the fiscal cliff deal at the end of the last Congress. Nonetheless, both Republicans and Democrats knew this was heading our way, and as is obvious from their inaction, they’ve each been rooting for it. The fact that the President and both houses of Congress are indeed willing to “suffer” the harsh cuts (again, no cuts folks, we’re still spending $15 billion more after sequester) is a strong indication that the sequester merely gives both sides cover to avoid being called-out for particular cuts that would be negative for their constituents.

The biggest losers in this battle will likely be the same groups that were so adversely impacted by the recession of 2008. Debacles like the sequester and the recession gave cover for employers, public sector and private, to cut older, more expensive workers. Moreover, they were able to carry out cuts to racial and gender groups that would not otherwise have been possible. Government figures confirm this, showing that roughly 552,000 non-farm payroll jobs have been lost since President Obama took office, from January 2009 to the present, and that 73 percent of those losses have been from women.

This graphic provides a breakdown of where these sequester cuts will hit. It should be noted that this represents the period 2013 to 2021:

Jon “DRJ” Najarian

Jon DRJ Najarian is co-founder of optionMONSTER and co-lead analyst for the InsideOptions trade idea alert systems. He spent the first 29 years of his trading career trading in and around the pits of the Chicago exchanges.

DRJ is a frequent contributor to CNBC, the Wall Street Journal, as well as other prominent financial media organizations. Mr. Najarian also co-developed the patented trading algorithm the Heat Seeker, used to detect unusual trading activity.

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