Understanding Obama’s sequester bombshell

By Robert Romano — Under the Budget Control Act of  2011, which will implement approximately $53.8 billion of sequestration cuts to  outlays in 2013, the White House Office of Management and Budget (OMB) was  required to submit to Congress its plan for implementing the cuts.

That should have been presented, along with its annual budget “[o]n or after  the first Monday in January but not later than the first Monday in February of  each year.”

As of Feb. 11, OMB has still not submitted its budget for the year along with  its sequester plan — despite having almost two years to plan, including a two  month delay to sequester that was supposed to kick in on Jan. 2.

Instead, the  White House dropped a bombshell “fact sheet” on Friday, Feb. 8 to scare  everyone — Congress, media outlets, and the American people — into submission.  It doesn’t want any cuts to occur.

Or anyone to see just how small those cuts really are, we might add — but  more on that later.

The Obama Administration warns ominously that the cuts “threaten thousands of  jobs and the economic security of the middle class.” Outgoing Defense Secretary  Leon Panetta warned that the defense cuts would result in a “hollowed” out  force.

Based on those panicked claims, if the cuts go into effect on March 1, we  suppose that by, say, April 1, unemployment will jump to 20 percent, and the  Chinese will be occupying Hawaii, Japan, and South Korea. Right?

Fortunately, under  the Sequestration Transparency Act of 2012, OMB did prepare .... Read  it for yourself and decide.

As taxpayers you are entitled to know the truth, and to have a ready means of  verifying some of the White House’s assertions.

For example, for the Small Business Administration (SBA), the White House  alleges that “the automatic cuts triggered by a sequester would reduce loan  guarantees to small businesses by up to $540 million.”

What the White House leaves out of its “fact sheet” is that the SBA’s “Business Loans Program Account” will only be cut by $29 million under sequester  in 2013, leaving $330 million in untouched budget authority, according to OMB’s  preliminary estimate.

But wait, how could a $29 million budget cut result in $540 million fewer  loans? Leverage. The SBA actually does about $12 billion of guaranteed loans  every single year according  to Entrepreneur.com — even with its annual budget authority in the hundreds  of millions.

This is confirmed by the  White House’s 2013 SBA budget request for “$497 million in new budget  authority for the Business Loans Program account,” which actually “supports $14  billion in 7(a) term loans and $2 billion for 7(a) revolving lines of  credit.”

Based on that rough proportion, with $330 million of budget authority for  2013, the SBA should be more than able to still support $10.6 billion of loans  this year. Which is hardly the budget catastrophe the White House alleges. They  will barely miss the $540 million less loans.

Yet to believe Obama, somehow this modest cut to SBA will “constrain  financing needed by small businesses to maintain and expand their operations and  create jobs.” Please.

To offer another example — there are actually very few to point to in the “fact sheet” since there are so few dollar amounts even provided — the White  House complains that Native American tribes “would lose almost $130 million in  funding from the Department of the Interior.”

Interestingly, that amount was actually less than what the OMB report stated  for FY 2013 of a $212 million of budget authority cuts to the Bureau of Indian  Affairs and the Bureau of Indian Education.

What the White House leaves out is that those two bureaus will still receive  $2.2 billion of new budget authority in 2013. Again, no catastrophe. They’ll get  by just fine.

It’s like that across the entire OMB sequester report. Affected government  programs face reductions of anywhere from 7.6 percent to 9.4 percent. Some may  even see a 10 percent cut. What it all means is these programs will still  roughly receive 90 cents or so on the dollar — in every single affected  category.

No programs — none — are eliminated under sequestration. The cuts are not  prioritized. They are across the board to non-exempted programs.  It must  be noted that the cuts per department and agency would be even smaller had fewer  programs been exempted.

Exempted programs included Social Security, most of Medicare, Medicaid,  unemployment, food stamps, and other entitlement and welfare programs.

Recall that the $85 billion reduction of budget authority comes out of a $3.5  trillion budget — just a 2.4 percent overall cut. If these cuts had truly been  across the board to every program, affected programs would be seeing 97.6 cents  on the dollar they saw last year instead of 90 or so.

Overall, instead of providing a sober assessment of the budget, as is  required under law, the White House decided instead to proffer a misleading “fact sheet” right before the weekend to incite hysteria. And the more  hysterical their claims become, the more obvious it should be they are full of  it.

Perhaps their biggest fear is that if this mere 2.4 percent cut to the budget  actually is allowed to go into effect — nobody will notice.

Robert Romano is the Senior Editor of Americans for Limited  Government.

Read more at NetRightDaily.com:  http://netrightdaily.com/2013/02/understanding-obamas-sequester-bom...

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Exempted programs were SS Medicare and Medicaid...Ho Hum!  those just happen to be the three programs which continue to cause big budget deficit....Let me guess...at the last minute there will be a special exemption for deff dept and IC....the beat goes on until all the lenders wise up/// the beat goes on, except that fuzzy math and smoke with mirrors cannot last forever...Push it up to the next election and let the other guy handle the problem...whatta plan!  All obumber wants is to please his constituency with payoff... Time for us conservatives to be heard and believed.

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