Monthly Archives: August 2012

CBO: DIRE CONSEQUENCES IF SEQUESTRATION ALLOWED TO OCCUR

A study released Wednesday by the Congressional Budget Office details dire consequences if Congress does not take action to avert the massive spending cuts set to occur in January under sequestration.

The CBO study predicts that the U.S. economy will sink into a deep recession and unemployment will jump from 8.3 percent today to 9 percent by the middle of next year.

As Reuters reported:

Massive U.S. government spending cuts and tax hikes due next year will cause even worse economic damage than previously thought if Washington fails to come up with a solution, the Congressional Budget Office warned on Wednesday.

Without action by Congress to avoid a “fiscal cliff,” Americans should expect a “significant recession” and the loss of some 2 million jobs, CBO director Doug Elmendorf said in his gloomiest assessment yet.

While the White House and Congress seem to agree that allowing sequestration to take effect would be catastrophic, they continue to be at odds over how to resolve the stalemate. As New York Times reported:

The House speaker, John A. Boehner, said the report showed an urgent need for legislation to stop the impending tax increases and the looming cuts in military spending.

“Instead of threatening to drive us off the fiscal cliff and tank our economy in their quest for higher taxes, I would urge President Obama and Congressional Democrats to work with us,” said Mr. Boehner, an Ohio Republican.

The White House said Republicans were blocking a solution.

“They’re willing to hold the middle class hostage unless we also give massive new tax cuts to millionaires and billionaires,” said Jay Carney, the president’s press secretary.

To accompany its report, CBO put out a handy infographic that summarizes the impact of sequestration and what would happen if the massive cuts are averted (seen in the graphic as “An Alternative Fiscal Scenario”). Click for a larger version:

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WHITE HOUSE DETAILS POTENTIAL CUTS FROM SEQUESTRATION

Officials from the Obama administration went to Capitol Hill last week to discuss the potential fallout if sequestration is allowed to take effect in January.

According to Federal Times, the $109 billion in sequestration budget cuts scheduled to go into effect Jan. 2 would likely mean hiring freezes, furloughs and staffing reductions at the Defense Department, FBI, Border Patrol and Transportation Security Administration.

It could also mean:

• 2 million jobs lost nationwide, including 270,000 federal jobs.

• A near-doubling of the Social Security Administration’s pending disability insurance claims backlog.

• Significant cuts to the Federal Aviation Administration’s efforts to ensure safe air travel, and slashed food safety and workplace safety inspections.

• Delayed Defense construction projects.

• Partial or full closure of numerous national parks.

• Severe cuts to National Weather Service forecasting.

Half of the cuts would hit the Defense Department alone. Last week, the Obama administration said it will exempt military personnel programs from sequestration. While the move may quell some of the worry of service members losing their jobs or bonuses next year as a result of the budget impasse, the announcement carries with it bad news for other parts of the defense budget, according to Military Times.

By exempting the account for military pay, benefits and change of station travel from cuts if the once unimaginable across-the-board cuts come in January, the Obama administration would have to make even deeper cuts in other defense programs.

If all programs were treated equally, every account would be cut by about 8 percent in January, according to senior House Armed Services Committee aides who spoke with reporters before the White House letter was received. With personnel exempt, every defense program faces a 12 percent cut, the aides said.

At this point, it’s unclear whether the standoff between the White House and Congress will be resolved before the sequestration cuts take effect.

Below is an Aug. 3 report on the sequestration crisis from the PBS News Hour:

WHAT IS SEQUESTRATION?

You’ve probably begun to hear a lot about something called “sequestration”. But what is it? And how would it affect your job and the program or service you help deliver to the American taxpayer?

AFGE has created this special website to answer your questions and keep you informed with the latest information. Bookmark this page and return to it often to keep up to date.

Below is a brief overview of sequestration. For additional materials about sequestration and related budget cuts, click the link at the top of this page entitled “Materials”.

What is sequestration and what does it mean?

Sequestration refers to the automatic spending cuts that are required under the 2011 Budget Control Act. This law required $1.2 trillion in automatic cuts to mandatory and discretionary programs, to begin in 2013, if Congress failed to pass legislation that would reduce the nation’s deficit by at least $1.5 trillion during the next decade. The failure of Congress to pass any deficit reduction legislation has triggered the automatic cuts required under sequestration.

These across-the-board cuts are set to begin January 2, 2013, and continue for the next 10 years. The cuts must be split equally between security and non-security programs, according to the Budget Control Act. Some programs are exempt from these cuts – including Social Security, Medicaid, Medicare beneficiaries, civil service and military employee pay, and veterans benefits. However, most programs will see automatic cuts across every budget line item.

In July, Congress passed legislation that requires the White House to provide details on how agencies will carry out the first round of cuts, which amount to $110 billion. In response, the Office of Management and Budget issued a memorandum on July 31 stating that it would begin working with agencies on such plans barring congressional action on a “balanced deficit reduction plan”.

Sequestration by the numbers

For 2013, the across-the-board cuts would mean the following, according to the Center on Budget and Policy Priorities:

  • About an 8.4 percent cut in non-defense discretionary programs
  • A 7.5 percent cut in affected defense and security programs; this includes the Defense, Homeland Security and Veterans Affairs departments, the National Nuclear Security Administration, some management functions of the intelligence community, and international affairs programs funded through the State Department
  • A 9.0 percent cut in affected mandatory programs other than Medicare
  • A 2.0 percent cut in Medicare provider payments

These amounts are not proportional to every budget that is to be cut. Smaller budget items will have to make major sacrifices, while larger items will barely be affected.

What this means for you

By cutting funding to government programs, there will be a downgrade in services that many people rely on every day. From food inspections to park maintenance, there will be less funding, forcing the organizations to cut back on area that they shouldn’t have to.
Many organizations will adjust to the budget cuts by cutting jobs, potentially leaving millions jobless.

 

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