Playing "Chicken" with the Country

Here comes the next chapter in our 2013 political crisis calendar – sequestration.  We’ll see who blinks first in this coming head-on game of chicken between the big-government do-gooders and the small-government do-it-yourselfers.  In an article titled “Defcon Hill” by Jeremy Herb posted today on The Hill, we learn that if we haven’t resolved the budget crisis by March 1, up to 800,000 civilian military employees will be impacted with furloughs.  These furloughs could be as much as one day per week the rest of the year – effectively a 20% cut in pay.  The Pentagon notes that because the President has the power to protect active military personnel, the civilian workforce is the only place to turn to respond to the forced reductions which will be required by sequestration if we do not come to a budget agreement by then.

The Pentagon announcement is just the first we will hear over the next ten days or so.  Every branch of government is going to tell us how the country will fall apart without their spending increases.  The fear-mongering, political posturing and self-preservation will hit fever pitch.  We will be told that if we go to sequestration, our country will face upheaval of unpredictable magnitudes. 

My response?  Good!  It’s about time we had to deal with this giant tar-baby of out-of-control spending.  It will be painful.  It will be ugly.  It is necessary.  I do not take any pleasure in seeing turmoil in the lives of our government employees, but it is time to face this giant.  The private sector has been dealing with its fiscal disaster since 2008 while our government has been on a spending spree.  Government employees cannot escape their own “bubble” forever.  Whether we like it or not, a government financial earthquake is coming.  Let’s relieve its pressure and feel its shocks now before things get any more damaging.

Will we resolve this crisis before sequestration sets in?  I am absolutely convinced we will not.  Will we go into financial meltdown?  I am convinced we will not – at least not yet.  Congress will find another stop-gap to buy a little more time while they rack up even more debt.  I just don’t believe our grid-locked and financially ignorant (in the purest sense of that word) Congress will summon the resolve to deal with this problem.

What’s a citizen to do?  For the stout of heart, you might consider buying double-short options on the Dow and baling out in a couple of weeks at the height of the coming crisis.  This 14,000+ bubble in the DJIA is about to burst in the short term.  Long term, I’m not sure quite what to do, but I am convinced that I had better be figuring it out.  I believe our day of national fiscal reckoning is fast approaching.  Would sequestration wreck the country?  Maybe, but I am convinced we are wrecked anyway without similar or even greater levels of cuts made by design.  Any budget proposal that isn't talking about budget cuts in the trillions annually is no budget proposal at all.  That's one thing we should all be pushing Congress for.