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February 28th, 2013

Sequestration Is Happening, But Effects Are Unclear

Related Lesson Plan: What is Sequestration?

The government in Washington is about to go into “sequestration,” a series of automatic budget cuts that will affect everything from national parks to Head Start education programs, to military orders for fighter jets.

U.S. House Speaker John Boehner leads fellow House Republican leaders in a news conference at the U.S. Capitol where he answered questions about Congress’s plan to avoid the sequester.

Sequestration will strip most federal agencies of a total $1.2 trillion over the next ten years, putting pressure on President Obama and Republican leaders in Congress to compromise on taxes, spending and the national debt.

Congress approved the idea of sequestration in 2011 as a part of the debt limit law.  That law set up a deficit super committee that was supposed to come up with a compromise between Democrats and Republicans.  It failed.

Half of the cuts in the sequester will affect defense and the military, primarily Republican priorities, and half will affect domestic programs supported by Democrats, causing equal pain to those on both sides. The first round of budget cuts is worth about $85 billion before September 30.

Some Libertarians and conservatives have embraced the idea of the sequester, seeing it as their best opportunity to slash the size of government.

Next political battle: Continuing Resolution

While sequestration officially takes effect on March 1, most government agencies have prepared for the cuts in advance to make them less immediately painful.

The other important deadline is March 27, when the Continuing Resolution (CR) that temporarily funds all government programs expires. CRs help the federal government pay for itself between budgets if a new budget is not passed before the old one expires.  This means that Congress has almost a month after the March 1 deadline to propose and pass a spending bill that will either keep or override the sequester.

However, if Congress cannot pass a spending bill or another CR before March 27, it will trigger a government shutdown, where all but “essential” government workers must stay home.

The defense industry has lobbied hard to stop the sequester, since it will be one of those hardest-hit by the budget cuts.

 

What could be the effects of sequestration?

If Congress does nothing to stop sequestration, up to 10 percent of the budgets of affected agencies could be cut.

The sequester will most affect large cities and military communities, which are more tied to federal funding.

At the same time, the pain of the cuts might not be felt for some time. Those who will be affected first will be businesses that have contracts with the federal government for services such as building military equipment or computer programming. They have been feeling the pressure of the upcoming sequestration since late 2012.

Many government jobs may also be furloughed in order to prevent layoffs. When a furlough goes into effect, workers are forced to work fewer days for less pay, but still keep their jobs.

The sequester could also affect the airline industry, causing delays in air traffic control and security.

Federal Reserve Chairman Ben Bernanke recently spoke to a Senate committee about the economic effects of the sequester, warning that it could slow down economic growth over the next year; not a good development for the still-struggling U.S. economy.

“I think an appropriate balance would be to introduce these cuts more gradually,” he said.

Even if the sequester ends soon, Congress and the White House will continue to work on the federal debt (the total amount of money the government has borrowed over the years) and federal deficit (the one-year difference between spending and income), which will mean making cuts in programs valued by Americans on all sides of the political divide.

– Compiled by Allison McCartney for NewsHour Extra

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