The 2013 Sequester: By the Numbers

The 2013 Sequester: By the Numbers

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Last Friday, the American economy suffered another setback as Congress failed to replace the sequester.

The sequester is a $1.2 billion dollar package of federal spending cuts. To sequester means to remove or withdraw; in this context, it refers to the withdrawal of some of the funds that Congress has already approved. The purpose of the sequester was to help stabilize the national debt by reducing the total amount that the nation owes by $4 trillion over the next decade when combined with other measures that the administration has already signed. Back in 2011, Congress passed the Budget Control Act under the premise that if both parties couldn’t agree on a plan to further reduce the national debt, the sequester would take effect beginning March 1, 2013. In short, the sequester was agreed upon with the intention that it would never be passed into law. Indeed, it was designed poorly specifically so that lawmakers would have to fear the political blowback if it ever was passed. And yet here we are.

Over the past two years, Congress has already reduced the debt by more than $2.5 trillion. More than 2/3 of the reduction has come from spending cuts; another $600 billion has come from new taxes; $500 billion has come in the form of interest savings. Yet, we’re facing over $1 trillion of additional, arbitrary budget cuts in order to meet the $4 trillion goal.

Perhaps it’s fatigue from the coverage of the debt ceiling in 2011 and fiscal cliff in 2012, but there has been much less media coverage of the impact of the sequester. But just like the other budgetary crises, the sequester threatens thousands of jobs and could potentially hinder recent economic growth. As detailed below, the sequester will likely hit low-income residents particularly hard.

The Devil is in the Details: Decoding Sequestration

According to the Congressional Research Service and White House Press Office:

  • Unemployment benefit checks will be cut by 9.4%. The average unemployed worker will receive $400 less between March and September, when cuts will be most severe.
  • An estimated 2.1 million people will lose their jobs.
  • Head Start programs, geared toward lower income families, face $400 million in cuts. Some 70,000 children will not be able to enroll for pre-school and daycare centers run by Head Start. Without a deal, more than 21,000 teacher and school staff jobs are threatened.
  • More than 4 million seniors will be affected by cuts to the Meals on Wheels program.
  • About 600,000 women and children will be cut from nutritional programs.
  • Nearly $3 billion will be cut from the Hurricane Sandy relief package. Approximately 10,000 homes and small businesses won’t receive the funding needed to be repaired.
  • Up to $540 million in loan guarantees to small businesses would be cut.
  • A $51 million cut to food safety programs could result in employee furloughs and plant closures. We should expect food shortages and higher prices because less food will be available, by as much as 2 billion pounds of meat, 3 billion pounds of chicken and 200 million pounds of egg.
  • The majority of the Pentagon’s 800,000 civilian employees will face furloughs starting in April.

Medicare, Medicaid and Social Security will, by and large, be left intact as-is. Opponents of sequestration point to this as a fatal flaw: these programs are among the nation’s largest sources of debt. Pell grants and veterans’ benefits are also exempt from cuts.

It’s time for Congress to stop playing roulette with the livelihoods of Americans. They have had plenty of time to devise a plan to reduce the deficit. Now time is ticking, and they owe it to their constituents to make a deal. What do you think about the sequestration?

March 4th, 2013

TAGS: policy | politics | sequestration | economic development | economy

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