Thursday, November 21, 2013

The next round of shutdown and deep sequestration cuts

January 15 is the scheduled time for the next round, and it's pretty serious.

Here are some thoughts I posted to the Lifeboat list about what's going on... from what it means to
how it might be contained:


About two weeks ago (see, I expressed great excitement
about the POSSIBILITY that a new DARPA program, XS-1, and follow-up on
a recent NASA-funded
study (see link posted at could restore our hopes of
getting affordable energy from space, and many other activities based
in space.

There are many threats or obstacles to making that real. The one which
worries me the most right now is sequestration. See:

The current sequestration path would imply VERY deep cuts in all of
DOD, NASA, as well as DOE, NSF, education and food for hungry
children. Budget negotiations which do not include entitlements or
taxes would basically revisit the same old budget space, and be
unlikely to change much on a partisan basis. Mitch McConnell says
there WILL NOT
be another shutdown in January... but folks said that kind of thing
before the last one, too.

With the same players in motion, and with the Tea Party encouraged by
recent polls on the President's popularity, there is not a strong
logical basis for ruling out another shutdown, followed by the same
old sequestration trajectory  and the nasty irrational politics about
specific budget items which deep cuts are likely to entail. CBO, for
example, has begun circulating the idea of just zeroing out humans in
(Will humans on earth be far behind?)

... So... it begins to get beyond my field (let alone what any of the
organizations I work with take a stand on)... but it begins to seem to
me that new balanced nonpartisan actions EITHER on Obamacare plus
Medicare (aimed at  preventing future cost growth
and maximizing efficiency, so as to minimize the payment by taxpayers
plus patients for the same level of medical benefit overall), OR on
tax reform, are pretty much the best hope of averting this kind of
disaster. A friend noted that this would cause elimination of some
jobs in healthcare (since improvement in efficiency would require
that, as well as cut some profits)... but the only alternative is to
cut jobs in the other areas, given the deficit constraint.

I have heard that there are certain changes and efficiencies which the
president really wanted for himself at the start, which he didn't push
because stakeholders would object;
however, a quietly arrived at deal between both parties would be freer
to allow more of that, so long as the ideological center of gravity is
not moved. (For the conservative side,
I could envision more opportunity for midwives and home births, and
less for unnecessary Caesarians, and also a prohibition on funding
through these venues of deep brain stimulation in medical treatment of
humans. My libertarian side was really
alerted by: . Yes, there are
folks chomping at the bit of a huge new gravy train... but in a time
of triage, there are many many reasons** not to
prepare to pay for that.) (On the technical side, I see lots of emerging possibilities for new "five cents" types of tests to displace "$200 tests priced at $2,000.")

Just two months... I do hope they can do a whole lot better than what
the URL above suggests! Otherwise a lot of us will be in trouble,
especially at the cutting edge.

Best of luck,


** I have heard many stories from people in a position to know about
how Parkinson patients, the group with the best claim to benefit, have
had brains fried by their implants.
For the general case... if you went to an auto mechanic, and he said:
"I have no idea how
your engine works, but I have a big hammer, and if you pay me I can
make a bigger one.
Just pay me, and I will take a big swing at your engine..." Like
frontal lobotomies of old.
Many people trust doctors much more than they trust auto mechanics
(though not everyone these days), so people have gotten away with
that... but I would hope
instead for a major research push to actually UNDERSTAND that essential system,
the brain, far more than we do today. A long story... but efficient
focused R&D need not be anywhere near as expensive as what people want
for DBS deployment.


For those who want to dig even deeper:

Towards the end of the discussion, people raised a point: ANY system
which reduces the combined payment by taxpayers and patients for
medical care will end up cutting costs which take the form of jobs.

I thought of an extension of the image of "ten people to screw in a lightbulb."
One screws in the light bulb. Four act as advocates for now allowing
it, hassling both doctor and patients. Four act as advocates and
record keepers for the action. The tenth person, who would normally
oversee many light bulbs, has to be full time on this one, to keep on
top of all nine other people.

But what of the lost jobs if we streamline this and only use one person?

A key point we didn't get to in the discussion:

To a first approximation, ANYTHING we do to reduce the deficit results in a loss
of jobs SOMEWHERE. If there is no deal between Administration and
Republicans to reduce costs in a technical way for Obamacare and
Medicare, there will still be deficit reduction...  by sequestration.
So an "equal number' of jobs will be lost anyway -- in
sectors like defense and research and education (not to mention food
for the poor), where
the damage will be more than just the jobs. That's VERY real as we
look ahead to January 15. (Indeed, that's why I hope for serious
action on this front, or on tax reform, or both, by January 15.)

Cutting out all funding for deep brain stimulation under Obamacare and
Medicare, by contrast, would mainly cut the growth of NEW JOBS in that
sector. Of course lots of folks are salivating over the hope of lots
of new money... but that's exactly what national budget planning needs
to worry about.


However... to honest, that is all just a first approximation. I have
looked a lot more deeply into the technical economics of this,
especially when I worked in Specter's office in 2009,
and was asked to give a Congressional briefing on the job impacts of
different climate bills.

IN THEORY, we could meet the deficit targets WITHOUT reducing jobs at
all (maybe even adding some) by exploiting what I call an "x-y"
strategy. Some government commitments (spending or tax breaks)
generate a lot more jobs (x) than the usual, while others generate a
lot less (y).  Thus by expanding x and cutting back y, at least for
the duration of high unemployment rates, we could increase jobs while
not affecting the deficit (if we start from a base of adequate deficit

But the practical problem is that x-y is too high level math for a lot
of key people
in the US, and the specific elements of x and y are highly political.
For example, many
tax breaks today (especially oil breaks) are of the y variety, passed
on more like Christmas presents, not really changing actions or
investments to a measurable degree.
On the other hand, the old "cash for clunkers' program had a big x
(because it was like a MATCHING fund eliciting legitimate private
sector investment); the "White House of Japan" developed a program
"Three Pillars of Eco-Economy" which they estimated would have three
times the multiplier effects of ordinary spending or public debt,
building on the clunkers idea, with matching fund incentives of
various kinds, moving in directions we know we need to move into

Still, if we cut out inefficiencies, there is hope that the Fed or
fracking will result in enough new jobs to keep us from going bust
altogether as a result of deficit reduction.
It scares me that this is only a hope... but... one day at a time.

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