Category: Budget

The Sequester is scheduled to take effect tomorrow, March 1^st. There are some efforts to delay, modify, or turn off the sequester but none of those proposals have sufficient support to move through the legislative process at this point. A policy brief on this topic will be sent to the UW community today.

That said, there is still some activity related to the sequester. The Senate will vote today on Democratic and Republican alternatives to the sequester, but both versions are expected to fall short of the 60 votes needed. The GOP plan would let President Obama come up with alternative cuts by March 15th. Democrats will advance a plan that includes a mix of taxes and other spending cuts in their version.

Why is the sequester taking effect now with so little debate by Congress? Mostly because no one is getting what they want, but they are all getting something out of the deal that they all call a bad way to run government. Some of the most liberal members of Congress see the cuts as a rare opportunity to cut defense spending. And the poor are protected from the worst of the cuts, and so the process could take some pressure off the Democratics to make changes to Social Security and Medicare. At the same time, the President gets some relief from fiscal issues to focus on his top policy priorities: immigration and gun control. And Republicans, while certainly concerned about the level of military cuts, finally see the federal government shrinking in real dollars.

So tomorrow we will see March 1^st and the beginning of sequestration, but this is not the end of the debate. The next few weeks will determine how the sequester is actually implemented as Congress decides how to fund the remainder of FY 2013 when the current CR expires at the end of March. So there may be some “modifications” to sequestration during March. And Congress may actively try to modify other effects of the sequester through the FY 2014 appropriations process. Essentially, this process of reducing federal spending will continue on even without the threat of sequester.

Congress returns to work Monday after a week-long recess period. Foremost on their agenda this week will be the sequester, which is set to take effect on Friday unless Congress takes legislative action before then. Barring an extremely unlikely last-minute deal, about $85 billion is set to be cut from military, domestic, and some health-care programs beginning March 1^st. Even if Congress decides to replace or delay some cuts during the late March debate on funding government for the remaining seven months of FY 2013, some cuts will certainly go into effect before then.

Sequestration involves trimming $85 billion from a $3.6 trillion annual federal budget, or about 2.4 percent. But the cuts will not affect Social Security or Medicaid, and the Medicare cuts total only about $11 billion in FY 2013. Thus, entitlement spending, which poses the biggest long-term challenge to the federal budget, accounts for only a sliver of the cuts. That leaves more than $70 billion in cuts to be applied over the next seven months to the roughly two-fifths of the budget that is devoted to discretionary spending, including research, education, the military, and dozens of other categories.