sequester.com

Sequestration

(Source: http://www.bizjournals.com/phoenix/morning_call/2013/02/3-reasons-why-congress-wont-stop.html)

DESPITE being a fed on the “inside” (as it were), the sequestration is a bit intangible to me. Being a regular fed is not much different from being a non-fed. I have no idea what is getting cut, when, where… etc. Even though I know what is going on in each program in the bureau, see how bad it could get, it is all as vague to me as it probably is to you. Maybe I’m stuck in my own head about it. Maybe it is because I am not in senior management, or not privy to widespread budget plans, but I haven’t heard anyone utter the word sequestration.

If anything, the only question that comes up in general is ‘budget cuts’. What gets asked: What about budget cuts? Should we be worried? We have been told that contracts may get cut by 50%. Sux for contractors… but this hasn’t come to fruition yet, at least not with any of the contracts I’m aware of. Maybe its part of the ‘sequestration’.

Everyone likes to criticize the feds. Overpaid, underworked… no… wrong about the getting overpaid part- that’s people who have been here FOREVER. And I just feel sorry for them most of the time. They just keep working and getting their salary. They’re not out enjoying their retirement with their family, or getting sunshine in the Caribbean. No- they’re working. We don’t even get 6 week vacations like they do over at the UN! So, if you’ve been here 50 years or you started your federal job when you were 20 (translation you spent your 20’s working instead of traveling Europe, you poor poor soul), then I guess you might be considered “overpaid”. But you also have way more responsibility than most people. So… they can have [a tiny bit] of fun with that.

But I digress. Sequestration. The topic was on the radio today, which reminded me I should give it some thought or at least figure out what sequestration means.

Today, on the Huffington Post: “Conventional wisdom currently is that the sequester deadline will pass and then Washington will come up with some sort of compromise solution. Perhaps just in time for the next self-inflicted crisis, the threat of a federal government shutdown on March 27 if Congress does not approve funding.” {Oh good. How optimistic. ;) ] http://www.huffingtonpost.com/joe-peyronnin/sequester-insanity_b_2721620.html

According to POLITICO: “President Barack Obama’s sequester strategy is all about one word: shame. With the parties at an impasse on stopping across-the-board budget cuts set to hit March 1, the White House is prepping another multimedia, cross-country drive to stoke public outrage against congressional Republicans.” (ps I editorialized the bold on the word Shame. You’re welcome.) http://www.politico.com/story/2013/02/obamas-sequestration-strategy-shame-87829.html

Wikipedia provides a 1-sentence explanation of Sequestration, and their page was last updated on Valentine’s Day of this year! ;) U.S. legal procedure in which automatic spending cuts are triggered, notably implemented in the Budget Control Act of 2011. (http://en.wikipedia.org/wiki/Sequestration)

CBS News asked this morning if Sequestration “really be that bad”. Their answer provided in the article: “In addition to forcing reductions of 13 percent for defense programs and 9 percent for other programs, the White House Budget Office reports sequestration would also mean, among other things, reduced unemployment benefits for over 3.8 million people jobless for six months or longer; 70,000 Head Start students removed from the pre-kindergarten program; layoffs of 10,000 teachers and other school staffers; and fewer border security agents and facilities for detained illegal immigrants.” [That sounds bad. ] http://www.cbsnews.com/8301-250_162-57570191/will-sequestration-really-be-that-bad/

And Inquiring minds want to know: What will happen in the stock market?

Forbes says: “The positive payoff is the reduction of the federal budget deficit by 5% a year. This is called being between a rock and a hard place. … Add that cut to the renewed charge of a 2% payroll tax on individuals earning up to $114,000 a year– and you reduce GDP by another 0.6% according to estimates I’ve seen. That adds up to a combined drag on economic activity of possibly 1.1% at a time where the nation’s economy is growing modestly at a rate of 1.7% to 2.00%. When you subtract 1.1% from 2 % you get growth at best of 0.9%– definitely not enough to drive the unemployment rate down to the 6.5% level. It’s a dangerous time for President Obama and for investors, who have enjoyed the rise back to very nearly the historic peak for the Dow of 14,100.” (http://goo.gl/0LXNs)

Look on the bright side: if you are under 35, you could watch the market plummet. (if this all happens). You should have minimal debt (being under 35, you better.) while making enough income (provided you don’t get laid off and you have a college/graduate degree with a good job). SO, when this all passes in a year or so, you will be ready to take the stock market at its helm in its lower dip and ride it back up the bull!

#GetReady

bullmarket

;)