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A little discussed impact of sequestration, due to take effect on March 1, is the fact that after 2014, spending will increase every single year in both defense and non-defense categories, reports the Congressional Budget Office (CBO).
In addition, there are real spending cuts, but they come nowhere near to totaling the $1 trillion figure that has been reported by various government agencies, including the CBO, not to mention media outlets and even this organization, Americans for Limited Government.
However, according to Congressional Budget Office figures, the cuts amount to only 1.2 percent of 2013 spending, which is enough to keep the government running for about 4.5 days. These sudden, harsh, arbitrary cuts would jeopardize our military readiness. Theyd devastate priorities like education, and energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs, Obama said on Tuesday.
However, in its latest budget projections, the Congressional Budget Office (CBO) explains that the sequester, a package of automatic spending reductions, would amount to only $44 billion in cuts in 2013, a mere 1.2 percent of total spending. By CBOs estimate, budgetary resources for defense (other than spending for military personnel) will be cut by around 8 percent across the board, and nondefense funding that is subject to the automatic reductions will be cut by between 5 percent and 6 percent, states the CBO. According to that estimate, discretionary outlays will drop by $35 billion and mandatory spending will be reduced by $9 billion this year, the CBO said in its Budget and Economic Outlook report issued on Feb. 5. (See pages 10, 11 and 14 in report.)
The CBO estimates that total federal spending will be $3.6 trillion for 2013, meaning that a cut of $44 billion would amount to only 1.2 percent of total spending a sum that would keep the government afloat for 4.5 days. The amount of spending cut by the sequester in 2013 is the equivalent of approximately 4.5 days worth of federal spending. On average, the government will spend approximately $9.7 billion per day in 2013, meaning it would take approximately 4.5 days to spend the $44 billion cut by the sequester. More pointedly, the CBO estimates that with the sequester in place, federal spending will be $3.553 trillion in 2013. With the $44 billion in sequester cuts removed, federal spending would rise to $3.597 trillion, which includes a little over $1 trillion in borrowed money, i.e., debt.
The sequester is a set of automatic spending cuts that target defense and non-defense spending. Originally proposed as part of the Budget Control Act of 2011 by President Barack Obama, they were designed to force Republicans to raise taxes by holding defense spending hostage. Now, Republicans say they are prepared to allow the cuts to go through, saying that if President Obama wants to avoid them, he should propose a plan that does so. Were weeks away from the Presidents sequester and the President laid no plan to eliminate the sequester and the harmful cuts that will come as a result of it, House Speaker John Boehnr (R-Ohio) said at a news conference Wednesday. It is incumbent upon the President and Senate Democrats to show us their plan to stop the sequester from going into effect.
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Its a little more complicated than that, Lew said in testimony at his confirmation hearing before the Senate Finance Committee. You said in your testimony that we cant let sequestration take effect. In Bob Woodards book, The Price of Politics Woodard credits you with originating the plan for sequestration. Was he right or wrong? Sen. Richard Burr (R-N.C.) asked Lew. Its a little more complicated than that, and even in his account, it was a little more complicated than that, Lew said, adding that they were in negotiation where failure would have meant the default of the government of the United States.
I hate to speed it up. Did you make the suggestion? Burr asked Lew again. What I did was said that with all other options closed, we needed to look for an option where we could agree on how to resolve our differences, and we went back to the 1984 plan that Senator Graham and Senator Rudman worked on and said that would be a basis for having a consequence that would be so unacceptable to everyone that wed be able to get action, Lew said.
Lew was referring to the Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Reduction Act of 1985, popularly known as Gramm-Rudman, which was proposed by Republican Sens. Phil Gramm of Texas and Warren Rudman of New Hampshire. After it was enacted, inflation-adjusted spending grew by only 1.4 percent annually, which is much lower than the 3.6 percent annual growth of the 1970s and four percent annual growth rate between 1980 and 1985, according to a backgrounder from the Heritage Foundation.
The enforcement mechanism of Gramm-Rudman was sequestration automatic spending cuts required to bring the deficit down to the legally-required level. So is it unfair that the president says the blame is on House Republicansthat they originated it? Its what he said, Burr asked Lew. Senator, the demand for an enforcement mechanism was not something that the administration was pushing at that moment. Our preferred outcome would have been to have there be something on taxes and something on spending, Lew said. It was unacceptable for the other parties for taxes to be part of it, and the only spending, only alternative that anyone could think of that could be agreed to was sequestration, precisely because its so objectionable that nobody could imagine it, Lew added.
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Conservative pundit Charles Krauthammer says President Obama could easily reduce the fear and panic engendered by the looming sequester if he would simply push Congress to pass a bill allowing a transfer of funds from less important federal accounts to more important federal accounts. "And the president is the one who ought to propose it," Krauthammer told Fox News on Wednesday. "He won't, of course, because he is looking for a fight, and not a solution." White House spokesman Jay Carney, echoing his boss, said on Wednesday that "the effect of the sequester would be severe, and it would go right to American families." Carney bluntly blamed Republicans, as Obama has done: "Americans will lose their jobs because Republicans made a choice for that to happen," Carney said.
Obama is pressuring Republicans to replace the sequester with a combination of higher tax revenue and spending reductions. Republicans say Democrats got their tax hike on wealthy Americans just last month, and they say now it's time to address runaway federal spending. Douglas Holtz-Eakin, the former head of the Congressional Budget Office, said unless Congress gives federal agencies transfer authority -- and lawmakers could pass a bill to do that -- layoffs may happen, because agencies won't be able to shift money from less important accounts to more important accounts.
Holtz-Eakin told Fox New's Brett Baier on Wednesday that the sequester requires indiscriminate, across-the-board reductions in the growth of spending, half of them affecting the Defense budget and half affecting non-defense spending. "But when you get underneath the surface, the federal budget is divided into thousands of different accounts," Holtz-Eakin explained. "Each account gets cut by the same amount, regardless of what's in it. So, we have some accounts that are payroll, some accounts that are conferences, travel, whatever it may be. They'll get the same cut, regardless of what's in there." Without transfer authority, "you can't shift the money around...There's no ability to ship money to high priority projects, and you know, low priority takes the cut. Everybody gets a cut regardless."
Using the example of the Defense Department, Holtz-Eaken said DOD has "thousands" of "budget buckets...each with money in them. As I said, some might be payroll. So, just all people in that one. Another one might be conferences. That's all just traveling and attending professional conferences. They get cut the same." The prudent thing to do would be to move money from the "conference bucket into the payroll bucket so that no one gets laid off," he said. But under the sequester, "you can't do that. So, we cut it, regardless whether it's a good or a bad idea. "It seems crazy because it is crazy," Holtz-Eakin added. "If you were doing rational...management of anything, you'd say, all right, what's important? People are important. Let's make sure they get paid and then we'll take the cut somewhere else. They don't have the ability to do that. So, the people will get furloughed."
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"I don't know why it is in this town, folks leave stuff until the last minute," Obama said in an interview with Baltimore's CBS affiliate, WJZ, one of eight local interviews he did Wednesday to gain support for his plan to prevent the cuts from taking effect. "There's no other profession, no other industry where people wait until the 11th hour to solve these big problems. And obviously, it creates a lot of uncertainty in our economy," he said.
The president also spoke directly to federal employees worried about their jobs. "What I say to them is that there is no reason they should be furloughed. There is no reason they should lose their job or be laid off," he said. "This is a problem that Congress can solve. you know, these automatic spending cuts that were put into place back in 2011, were designed to get Congress to actually avoid them, by coming together with more sensible approaches to deficit reduction."
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Lol you can thank you republican in congress for this mess.
