The United States is rapidly approaching March 1, the date on which the automatic spending cuts put in place by the summer 2011 debt ceiling deal will begin taking effect. There is little indication that Congress will avert the cuts as it did in January, as Republican leaders have thus far been unwilling to negotiate with President Obama and Senate Democrats.
Congress is currently on recess until next Monday, leaving just five legislative days until the automatic cuts — known as sequestration — will take effect. Here’s a breakdown of why the sequester was created and what it will mean for programs facing cuts and the nation’s overall economic recovery:
Why the sequester was created. The sequester was a result of the GOP’s wrangling over the debt ceiling in the summer of 2011, when Republican leaders — who had previously passed clean debt increases 19 times under President Bush — demanded spending cuts as the price for averting a costly default. On the brink of default, Congress passed the Budget Control Act, which enacted immediate spending cuts and created a supercommittee tasked with striking a “grand bargain” to reduce the deficit. Republicans walked away from the committee after refusing to consider tax increases on the wealthy, setting sequestration into motion. The sequester, which cuts from both domestic and defense spending, was designed to be painful enough that both sides would negotiate to avert it.
How to avoid it. The sequester was originally supposed to take effect on January 1, but it was avoided as part of the overall “fiscal cliff” deal that maintained most of the Bush-era tax cuts and enacted spending reductions to offset the first round of automatic cuts. In the past, Republicans offered plans to offset the sequester by cutting more spending, even though deficit reduction efforts have been heavily skewed toward spending cuts to domestic programs already. Democrats have offered multiple proposals that would bring more balance to efforts to reduce the deficit. A plan from the Congressional Progressive Caucus would replace the sequester largely with new revenue, evening the balance of spending cuts and revenue increases in overall deficit reduction efforts. Senate Democrats proposed a plan that reduced the deficit by $110 billion, enough to offset the sequester until next January. Half of the reduction comes from cuts, the other half from tax increases on the wealthy. Republicans, however, have again refused to negotiate over new revenues, even from tax reform that would close corporate loopholes.
What it will mean. Because its cuts are across-the-board, the sequester will affect most domestic programs. Jobless workers will lose access to unemployment benefits, while safety net programs for women and children and early childhood education programs will face deep cuts. The sequester will cut funding for law enforcement and border security, food safety, airline travel security, Head Start, disaster relief, and health research. Defense programs will also see reductions. These cuts will have broad ramifications for the country’s recovering economy, pushing it down the austere path Europe has followed into second recessions. Independent reports predict that sequestration would reduce economic growth by 0.6 percent over the year while also leading to the loss of 700,000 jobs. The debt limit fight that created the sequester already pummeled the recovery, and allowing these spending cuts to take effect would cause even bigger problems.