Sequestration. It’s a big word that most people have never heard before. Constant repetition in the media doesn’t help explain or define it, and the implications of what is pending (barring a last minute deal) are brutal.
The word “sequester” means to “set apart”. In this case, $108B per year is planned to automatically be set aside from the US Budget, half from the military and half from other discretionary programs (that is, not including Medicade and other entitlements). This is not a sequestration, it is a meat axe to the budget.
Assuming there isn’t a plan to stop this at the last minute, either by delaying it or passing a real budget for the first time in four years, what we have is the axe. You’re probably tired of hearing about it by now, but the use of words is important. The lack of a clear, common talk shows just what this is all about – an inside game that has to stop. How do we get past it?
As the slow ride towards sequestration continues it’s hard to find anything more to say. The possibility of a significant economic downturn and genuine pain being felt by many people has failed to move the parties towards any progress. How can government be this dysfunctional? How did it get this bad?
In attempting to answer this question I decided to take the Zen approach of unasking it instead. This led to a wisdom all parties must take heed of – both in this quote and in the larger context:
As we peer into society’s future, we – you and I, and our government – must avoid the impulse to live only for today, plundering for, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without asking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.
This is a part of President Dwight Eisenhower’s Farewell Address, delivered 52 years ago. The whole address, beyond the famous parts, is well worth absorbing today.
How can a company have too much money? If you believe hedge fund manager David Einhorn, Apple certainly does. Many in the tech industry “view their self-importance by the size of bank accounts,” according to this Apple investor, and he’s aggressively promoting a unique way of distributing the $137B Apple cash reserve to shareholders ahead of the company’s annual meeting on 27 February.
While Apple’s attitude is on trial – in the courts, the stock market, and the media – it’s hardly an unusual position for a technology driven manufacturing company. What is unusual is how Einhorn is approaching that pile of cash and how it is distributed. This may be more evidence that the days of corporate raiders as we know them are over and a potential new golden era for tech companies is ahead.
Right now we still have a fight to finish before anyone can claim victory.
When in doubt, you can always talk about the weather in polite Minnesota conversation. Days like today, when we are expected to have yet another big winter storm and the potential for Olympic Ice Dancing on the roads, it’s a topic you can count on. It’s not controversial but it provides a nearly endless supply of entertainment much like driving a flaming bus through a wall of televisions, at least in the sense that it’s likely to be lethal.
Many of us learn to be fascinated by the weather in ways that seek awkward and geeky to people in other parts of the nation. That’s a shame because a hard study of weather is a form of meditation that can clear your mind like no other form. Plus, it’s on teevee. Here in the middle of a vast continent we are at the mercy of whatever blows our way. It’s something that everyone can talk about – even if no one does anything about it.
What does a future of low economic growth look like? The Congressional Budget Office (CBO) economic forecast estimates a real growth (adjusted for inflation) of less than 2% for the foreseeable future. We have discussed before how this pattern is likely to hold through the next generation and around the world as population growth slows and new opportunities will come only through technology improvements.
The implications are vast, if for no other reason than investing and saving for retirement are going to be very different concepts than we have come to expect. Everything changes – and a few things may even change for the better. It’s worth thinking through, and carefully.