Sorting out the jitters over sequestration

Published: February 24, 2013 

Not everyone would be stung by automatic federal cuts, and some people like the idea of a bit of forced austerity.

WASHINGTON - It's probably a good idea not to be too frightened by any doomsday talk about the spending cuts that look more and more likely to kick in on Friday.

There would be pain, to be sure, with federal workers taking unpaid furloughs, some programs cut and as many as 700,000 jobs nationwide left uncreated. But the pain would be contained.

Some of us won't be affected?

Safety-net programs that touch millions who rely on government checks most, including Social Security recipients and the poor, are not affected. For the rest, the impact of cutting $85 billion from federal spending won't be felt all at once, and in some cases might not kick in for some time, if at all.

So, pain is not inevitable?

Congress could find an escape clause. If the cuts provoke a huge public outcry, a Congress where most incumbents are seeking re-election next year can undo at least some of the damage.

What will the political fallout be?

That's hard to calculate. If the economy keeps growing just a little, those lawmakers next year could point to the sequester as a boost. After all, constituents want the nation's debt reduced, a sizable minority is for proceeding with the cuts, and people are tired of Washington fumbling and delaying efforts to take serious steps.

Who will suffer?

Despite the White House's warning that chronic suffering is nigh, the impact will not be universal and depends on the agency, the program and the politics.

"The sequester affects different programs differently," said Sharon Parrott, a vice president at the Center on Budget and Policy Priorities, a budget research group.

How and when will people feel the changes?

Macroeconomic Advisers, a St. Louis-based research firm, paints a not-too-grim picture. By the end of next year, it estimates, about 700,000 fewer jobs would have been created than might have been expected.

But, the analysis said, "The macroeconomic impact of the sequestration is not catastrophic."

Big chunks of the budget are exempt, notably Social Security, Medicaid, veterans benefits, the Children's Health Insurance Program, Pell grants for students, and a host of programs that help the poor. Medicare spending is not subject to the entire reduction.

Which parts of the budget will be cut?

The cuts, about 2.4 percent of roughly $3.55 trillion in total federal spending, are focused on a small part of the budget. About half come from defense, which would be trimmed 13 percent or so, and half from some domestic programs, which would lose 9 percent of funding. There are lots of variables. Some agencies are said to have saved money in recent months, thereby easing the potential impact, and the timing of the cuts varies.

Got some examples?

Some big education cuts would take effect in the school year beginning in the fall, though hiring decisions are made starting in the spring. Community development and public housing funds would drop, cuts that would be felt throughout the year. Average wait times to get through airport security could go up 50 percent.

At the Pentagon, about 800,000 civilian workers face one-day-a-week unpaid furloughs for 22 weeks starting in late April.

Cuts in social programs are likely to start quickly so they don't hit all at once later in the year. That means reductions in jobless benefits for the long-term unemployed starting next month.

How quickly can Congress undo the damage?

All government funding runs out March 27, so lawmakers are working on a massive spending plan to avoid a shutdown, a plan that could restore some cuts.

Congress also could pass other, separate spending bills that detail where funds should be spent. There's hope on Capitol Hill that a defense bill will do just that, and some talk that should a program's cuts cause an outcry, lawmakers could add money in other legislation.

Will the cuts prod more efficiency?

The cuts were designed as a politically unpalatable poison pill that would force the government to agree on a better way to curb soaring deficits. With Democrats and Republicans unable to agree on much of anything, Democrats say the looming cuts will wreak havoc, while some analysts say the cuts, even if poorly designed, could force needed austerity.

"This will force government executives to find cuts," said Chris Edwards, director of tax policy studies at the Cato Institute.

Republicans tend to agree.

"We don't like sequestration - it's blunt, it's ugly, and it just doesn't work," said Sen. Lisa Murkowski, R-Alaska. "But it does force us to deal with budget cuts. It forces us to deal with a $16.4 trillion debt. … It does force prioritization."

"No matter what, there is no good way out of this. There are no good choices," said Senate Appropriations Committee Chairwoman Barbara Mikulski, D-Md.

Has the government examined other choices?

Unclear. Sen. Jerry Moran, R-Kan., asked White House Budget Controller Danny Werfel recently about the effects on the National Institutes of Health. Moran said NIH should have a lot of discretion in handling the cuts, and he wanted details.

"I'm not sure of the exact balance," Werfel said. NIH would have to "issue hundreds of fewer awards" that ultimately would be "setting back work on chronic illness and disease."

Moran kept pressing. "I'd like to know what the plan is," he said.

"We will get you that," Werfel said.

As of Thursday, Moran's office said that it had received no response.

What's the public say?

This could be the most crucial question, because if lawmakers see the impact clouding their political futures, the sequester could end fast.

There's no consensus on the political impact. A Pew Research Center survey Feb. 13-18 found that 49 percent said the cuts should be delayed while 40 percent said they should go into effect.

Who wins and who loses, politically?

No one knows how this will ultimately play. If the economy stumbles, critics will point to the sequester as a contributing factor, and those who defended it could be headed for trouble.

"If the sequester happens and the economy is better for it a year from now, it becomes a much different kind of political issue," said Nathan Gonzales, deputy editor of the nonpartisan Rothenberg Political Report.

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