Benefits of the Sequester
Excerpt from remarks to Boston College’s Chief Executives’ Club of Boston
February 6, 2013
TAKEAWAY: BENEFITS OF THE SEQUESTER
I’m of a different view on the sequester, because I am concerned enough about the long-term impact of the debt that I’ve looked at it, and said, I think … as a government they have three choices. The first one is to just let the sequester happen. The second one is to kick the can down the road again, like they did at year-end for a couple of months, and just buy some more time. The third one is to get that same $1 trillion reduction, but to do it in a thoughtful … considerate way, so that you make sure that what you’re doing makes sense.
After watching this for three years, I’d say that third option is not a real option. It’s just not going to happen. We can tell them to do it, they can have an agreement to do it—they’re not going to do it. So I kind of look at it as, we’re stuck with two choices. One is, we either let it happen, or we don’t let it happen at all.
And if I have to pick one of those two, I’d say, we’re better off getting that $1 trillion in debt reduction, and getting everybody focused on tax reform and entitlement reform, which they have to do. Because once this happens on the discretionary side, there isn’t a lot more left to do there. You saw the spending profile. That’s where all the defense spending, homeland security, all that other stuff, parks, all that stuff is in there … They’re going to be forced to go to entitlement reform and tax reform, which is what they need to do.
So while you could argue it will have some slight impact on economic growth this year, my view is that it’s more than overshadowed by the benefits you get in ’14, ’15 and beyond, by at least having another $1 trillion of debt reduction.