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2. About that Sequester
The president’s Saturday radio address warned of dire consequences should the sequester happen, cutting $85 billion from the federal budget for the next year. He said thousands of Americans are “likely to be laid off” if Congress fails to stop the sequestration cuts. He also argued (no doubt in an effort to get hawkish conservatives on board) that sequestration would threaten our military readiness.
Not bloody likely. Mercatus Center analyst and Reason economics columnist Veronique de Rugy crunched the defense numbers and noted that even after dipping slightly next year due to the sequestration, the defense budget will still continue to grow and grow fairly constantly for the next 10 years following that one dip.
George Mason University economics professor Tyler Cowen noted in a New York Times piece that while the job losses in the defense industry might lower our gross domestic product in the short term, in the long term we may well be better off because it “would most likely mean fewer engineers and scientists inventing weaponry and more of them producing for consumers.” Military spending does not generally produce real wealth as we see it. Shifting employment out of that industry might ultimately benefit our economic growth in the long run.