A recent USA Today poll revealed that about 25% of Americans know little to nothing about the sequester–the mandatory across-the-board budget cuts set to be instituted on March 1 (that’s next week by the way). This is alarming since these budget cuts could affect us on a daily basis and could make life pretty inconvenient. Probably because of this collective cluelessness, another Pew/USA Today poll revealed that if nothing is done to resolve the sequester issue, about half of Americans will put the blame on Congressional Republicans and about 30% will blame the Obama Administration. And so, the finger-pointing continues in yet another politican-created crisis.
How did we get ourselves into this mess?
The sequester resulted from the debt ceiling debacle in the summer of 2011. Congress was debating whether to raise the debt ceiling and had a deadline of August 1st to come up with an agreement along with a deficit reduction plan. A “supercommittee” of politicians from both parties worked together to figure out mutually beneficial tax increases and budget cuts. Not surprisingly, the committee failed to agree on final terms; what they did come up with was a plan to decide to plan to hopefully-maybe-fingers-crossed come up with some deficit reduction options sometime in the inter-galactic future.
This mandate was part of the Budget Control Act of 2011, and also included the sequestration language; that is, failure to agree on deficit-reducing legislation would automatically trigger the sequester, which are automatic cuts that would affect every discretionary area of the federal budget.
When the Budget Control Act was drafted, no one thought Congress would be so irresponsible as to allow these budget cuts to be triggered. But like the 2011 debt ceiling debacle that lasted over 6 months and culminated in deadline drama, and the recent fiscal cliff thriller that ended with “cliff”-hanging legislation on New Years Eve, it looks like Congress is going to ride this one out too.
How will the sequester affect government budgets & the economy?
The sequester calls for $1.2 trillion in deficit reducing budget cuts over ten years, about $85 billion in cuts for this year alone. All areas of discretionary government spending will be affected, including social services, defense, education and housing. The areas not affected by the sequester are funding Social Security, Medicare, Veterans Benefits, etc.
Economists and politicians fear that implementing the sequester will have negative effects on our economy. Some economists believe that these austerity measures would reduce economic growth by .5% –so that the US economy would grow at 1.5% annually instead of the 2% growth that was forecasted (already well below the healthy 3% minimum growth we’ve seen in past years). The cuts are also expected to increase the unemployment rate, expected to hover around 7.9% by end of 2013.
Recently, Erskine Bowles, former Clinton White House Chief of Staff and more recently, a co-author of a famous deficit reduction proposal that was commissioned by Obama but that went nowhere (the Bowles-Simpson deficit reduction plan), was quoted regarding the spending cuts from the sequester:
“They are dumb and they are stupid, stupid, stupid. They are inane. There’s no business in the country that makes cuts across the board. You go in there and you try to cut those things that have the least adverse effect on productivity.
“Second, they’re cutting those areas where we actually need to invest: education, infrastructure, research.
“And third, they don’t make any cuts in those things that are growing faster than the economy. And that’s stupid, stupid, stupid.”
What Do The Cuts Possibly Mean For Us?
While the cuts have not yet been instituted, it’s possible that government-funded programs, agencies, infrastructure initiatives, etc. will be curbed in the next few months. Here are some likely outcomes:
– Government and military civilian worker furloughs are likely.
– National parks, monuments, camp sites, forests, etc. could be closed or reduce hours of operation and services. Libraries may also reduce hours, services and close branches.
– Fewer teachers as well as cuts to education funding and grants; access to after-school and Head Start programs may be reduced or eliminated.
– Housing and mortgage assistance could be affected as cuts may affect HUD (that provides housing for lower-income Americans) and government-funded mortagage assistance programs.
– Less spending for research and programs for National Institutes of Health (NIH), Center for Disease Control (think West Nile, bird flu, etc), Food & Drug Administration (the return of cosmetic testing on kittens??? NO!), etc.
– Fewer government workers like the TSA (longer lines at airport security!!!), border control agents, immigration and drug enforcement agents, etc. IRS agents may also see reduced hours or cuts.
– Budget-slashing at the Justice Department could lead to fewer investigations of wrong-doing and more abusive practices slipping through the cracks. Budget cuts to other government-funded regulatory agencies like the SEC, FDIC, etc. could result in less oversight and possibly more abuses in the financial industry.
– The sequester could hurt Hurricane Sandy government-funded recovery efforts.
– Cuts to defense resulting in less training for deployment readiness, cuts to equipment and weapons maintenance, investment in weapons, etc.
– Major cuts to defense funding could result in decreased naval and Air Force operations.
The Sequester Squeeze
With a week left to go before the sequester kicks in, Congressional politicians have been busy doing what they do best: finger-pointing while on vacation. The Republicans have been putting the responsibility on the Obama Administration, calling it the “Obama sequester” (even though the vast majority of Republicans voted for the Budget Control Act and the sequester in 2011.) The Democrats have taken their turns at the blame-game, accusing the Republicans of dragging their feet and not caring whether the cuts kick in.
Either way, it looks like we’re in for a bit of austerity starting next week. If so, now might be a good time to check out a ton of library books you don’t plan on returning and fudging on your taxes. There may not be anyone on the other side to check up on you.