Can we pull back from the fiscal cliff? Yes, we can. In fact, we must
November 11, 2012 5:00 AM
By Rob Smith
A year ago, if I said I was worried about "sequestration" most folks would have figured I needed a doctor and wondered if it was something they could catch. But by now just about everyone knows it means a trillion dollars in automatic budget cuts that would start in January.
Sequestration is part of the "fiscal cliff" that was put in motion when a congressional "supercommittee" collapsed last fall without agreeing to a long-term, deficit-reduction plan. In effect, Congress extorted itself by agreeing to automatically trigger devastating tax hikes and spending cuts unless it comes up with a reasonable compromise by Jan. 1. Experts say going over the cliff would blow up our fragile economic recovery and drag us back into recession next year. Obviously, we cannot afford to plunge over it.
But too many myths still cloud the sequestration debate. Many Americans don't know, for example, that it's not just defense on the chopping block -- sequestration would slice through virtually every operation of our federal government, from commercial aviation and air traffic control to critical programs like food inspection, mine safety and even the FBI.
People also don't realize that these mechanical, automatic cuts would continue for a full 10 years. If Congress doesn't find the will to act, these zombie cuts would chew up our government and drag down our economy until today's kindergartners are in high school.
But one of the biggest -- and most dangerous -- misconceptions is where the sequestration axe would fall. Far too many assume the savings would be found by painlessly squeezing bloated government bureaucracies or shaving a decimal point or two off of corporate bottom lines. But the truth is very different.
Most sequestration savings would come from eliminating American jobs -- 2.14 million jobs would be destroyed in 2013 alone. And over half of these would come from small- and mid-sized businesses that form the backbone of economic recovery and growth. In Pennsylvania, it's estimated that the smallest businesses would lose more than 35,000 jobs.
On the defense side of the sequester, the harm to small business would be especially severe, since 70 cents out of each defense purchasing dollar go to supply chain firms. Industry-wide, two-thirds of defense manufacturing jobs are at small- and mid-sized businesses -- those least able to ride out the tidal wave of sequestration.
My company, Acutec Precision Machining Inc., is a precision machine shop in Northwestern Pennsylvania that turns out custom metal parts for a wide range of commercial and military aerospace, power generation and other applications. We may be small, but we run some of the most advanced computer-controlled turning, grinding and milling equipment in the world, supplying parts for almost every major aircraft flying today. If it flies, chances are good there's an Acutec part in it somewhere.
We're a healthy company. We've made big investments in cutting-edge equipment and are looking to hire more employees to serve growing aerospace markets worldwide. But sequestration is such a thoughtless, mindless meat axe, no one knows exactly what programs and contracts would get shut down. That kind of uncertainty is tough for any business, but it hits smaller shops with narrow margins hardest of all. We should be growing these engines of economic recovery and jobs -- not smothering them under the economic wet blanket of potential sequestration.
As owner of this business, I'm mostly focused on what sequestration would mean for my people, for the families and communities that depend on a healthy Acutec. But as a citizen, I also worry about losing hard-earned skills and technical capabilities that are a foundation of America's military strength. People at companies like Acutec and its peers are a cornerstone of America's security infrastructure -- we need to invest in them just as we do our troops and military equipment.
This is a story that can be repeated across dozens of industries, for sequestration would devastate small businesses and livelihoods up and down our entire economy. There are almost a million small businesses in this commonwealth, providing nearly half our private sector jobs. As go these businesses, so goes economic recovery.
We Americans have gotten so used to gridlock in Washington that we've almost given up on making real demands of our leaders. We've become far too accepting of brinkmanship, government shutdowns and manufactured crises. We tolerate legislative mayhem because we can't imagine our government doing any better.
But it doesn't have to be this way. Republicans and Democrats agree that sequestration would undermine American security and explode our fragile economic recovery. This ought to be the perfect issue around which our leaders can rediscover the lost art of compromise and bipartisan deal-making. Perhaps if enough Americans speak up, they will. Because that's the greatest sequestration myth of all -- that there's nothing we can do to stop it.