2013 / 3 March

The Sequester Explained: How We Got Here and How To Get Out Alive

Obama and Boehner

Proposed government budget cuts designed to be so painful Congress would have to reach a deal were signed into effect by President Obama, who was required by law to order the so-called sequestration by 11:59 p.m. Friday night. How did we reach the point that compromise could not be reached to avoid the worst possible plan for budgetary cuts? What can we do now? I lay it all out below.
 

 

Where…did these cuts come from?

 

Short Answer:

1985 Balanced Budget and Emergency Deficit Control Act and The Budget Control Act of 2011

“Sequestration” is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. It was first authorized by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, Title II of P.L. 99-177, commonly known as the Gramm-Rudman-Hollings Act).

Congressional Research Service

In 2011, Congress passed The Budget Control Act which threatened arbitrary across the board cuts unless both parties could agree on a plan to reach a $4 trillion goal deficit reduction. There are $1.2 trillion dollars left to cut in this round of government spending cuts.

It is not a matter of if these cuts will be made, but rather how they will be made because of these laws which are meant to reduce our national $16 trillion deficit to a number economists believe we can stabilize from.

Government agencies now face a total of $85 billion in cuts from their budgets between Saturday and October 1.

Why…would worst-case-scenario cuts be passed?

The threat of unrestrained, automatic cuts on programs regardless of their importance or effectiveness was meant to be threatening enough to bring about compromise in what would actually be cut to achieve about another $1 trillion dollars in cuts. Even another lurking fiscal crisis, however, was not enough to bring about compromise in Washington.

How…can we pass a better law?

President Obama and House Speaker Boehner

President Obama and House Speaker Boehner Credit: Bloomberg

Democrats argue Congressional Republicans are to blame for refusing to even consider closing tax loopholes that benefit only the wealthiest Americans and well-connected corporations.

Republicans put the blame on the President and Senate Democrats for the cuts. The Senate has not passed a bill outlining cuts to make instead of the sequester while the House had passed two bills in the previous Congress to avoid what House Speaker John Boehner calls “the President’s sequester.”

Some libertarian Republicans even support having the sequester happen. Rep. Jim Jordan of Ohio calls says the sequester is the “first time we’ve actually saved the taxpayers some real money.” More defense-minded members of the party are worried about consequences for national defense and security. The Pentagon will be bearing 50 percent of the cuts.

The Republican message is more mixed than that of the Democrats, but some in the party are happy that cuts are at least being made. The Democrats, meanwhile, have not gotten anything they wanted.

In order to pass a better law, difficult compromises will have to be made for what programs will get cut the most and whether or not to close tax loopholes or raise taxes.

Although the President has pressed the issue of closing tax loopholes on corporate jet owners and big oil companies, all of the proposed closed loopholes would be enough for only 6 months of a period of 10 years of cuts. Republicans meanwhile refuse to accept closing loopholes or any tax increase.

Any compromise on what programs and agencies receive the most cuts would be better than no compromise at all and most members of both parties seem to recognize this.

What… will happen if the sequester is not resolved?

The sequester is not a fiscal cliff. This is a one of a series of cuts that will be made over the course of ten years and encompasses about 2-3 percent of the national budget. No matter how the President and Congress compromise on how to make the cuts, this round of $1.2 trillion in spending cuts will happen.

The automatic cuts will take place over the next seven months and can be stopped by Congress at any point if Democrats and Republicans can agree on another plan to make the cuts.

With that said, eventually some very painful cuts will be made. The Justice Department has already sent notices of furloughs, unpaid leave, that could begin in late April for 115,000 workers, including at the FBI. There is also a threat of government shutdown looming in late March.

These cuts threaten the jobs of educators and could leave the military understaffed and unable to respond to threats. Cuts will also decrease unemployment benefits, college work-study funding, programs for the poor, vaccination availability, government hours and jobs, and government research grants.

The full brunt of the automatic cuts will be borne over seven months and Congress can stop them at any time if the two parties agree on how to do so.

Relax It's Not the end Of The World

Do you think the sequester will be resolved? Is it the end of the world? Be sure to comment on the antics of Washington.

  • Merideth Tumasz / March 4, 2013 AT 12:45 AM

    Fascinating article, plus I love John Stewart. This sequester really hit people hard because it all happened to suddenly and people/companies didn’t have a lot of time to prepare. It’s kind of a bitchy move by Congress, but I guess something needed to happen sooner or later to get the ball rolling.

    On a different note, I really like the new layout, and the blog roll and twitter feed on the side are really neat!

    Reply
  • Even though the world won’t end with the sequester, the lower end of the totem pole suffers from this. The furloughs and unpaid leave will really hurt the middle class, many of whom only have the one job that was supposed to be safe, a government job. Otherwise nice blog update (way to copy what will happen to the WRGW news page…)

    Reply
  • I think it’s just sad that even with the months of notice and the devastating effect of the sequester, Congress still couldn’t work a deal out. Compromise has become the enemy in Washington and we are all suffering for it.

    Reply

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