Friday, February 22, 2013

Week of high drama in Washington

I hear everybody talking about "sequester" – but most  people don't quite get it.  .So I did a little digging and this is what I have found:
(Thanks to the Washington Post Newspaper and Andrew Taylor, Associated Press; for background information:)

The “sequester” is  a package of automatic spending cut developed  in the fall of 2011. $1.2 trillion in  cuts are scheduled to begin in 2013 and end in 2021, divided over the nine-year period. Cuts are split between defense spending  and domestic spending.  Funding for current wars, Social security and Medicaid will stay about the same. $109 billion would be cut in 2013.
Where do the cuts come from?
The sequester was triggered when our federal legislators  failed to pass a 1.2$ deficit reduction package in November 2011.

With sequestration, legislators don’t have any discretion with the across-the-board cuts: The cuts are intended to hit all affected programs equally.  The legislators don’t have much control over how cuts are made. The plan is designed to pressure legislators into making a budget deal to avoid the cuts.
Anticipated effect of sequestration on national economy

Some defense officials warn that the cuts will lead to unbalanced reductions. Democratic legislators have warned about the impact on social programs. And defense, health care and other industries that are significantly dependent on federal spending say that major job losses will happen if the cuts end up taking effect.

The government was approaching its debt limit, which needed to be raised through a congressional vote or else the country would default in early August 2011. While Democrats were in favor of a vote without strings attached, Republicans were demanding substantial cuts in exchange for raising the debt limit.

Why have the Republicans suddenly decided that the debt limit should not be raised?  To view the situation in perspective - this graph shows how past presidents dealt with raising the debt limit:

Past presidents and raise in debt ceiling 

President Obama and Congressional leaders finally agreed to allow the debt ceiling to be raised  $2.1 trillion in exchange for the establishment of a committee to oversee the period of budget adjustment.
The deal also includes mandatory spending reductions.

 Party leaders, the White House and most members of Congress supported the debt-ceiling deal, passing the bill in the House by  268-161 vote, with about one-third of House Republicans and half of House Democrats opposing it. It passed in the Senate, 74-26, with six Democratic senators and 19 Republican senators opposing it.

So this is where we are now:  Republicans don’t want to raise taxes to generate revenue, while Democrats are reluctant to make dramatic changes to entitlement programs to achieve savings.

What cuts will actually occur:

2013 Sequester Breakdown

 Here are just a few. Update: Note that these are rough estimates based on numbers put out by OMB before the fiscal cliff deal:  Note that many of these affect jobs and economic growth.
  • Aircraft purchases by the Air Force and Navy are cut by $3.5 billion.
  • Military operations across the services are cut by about $13.5 billion.
  • Military research is cut by $6.3 billion.
  • The National Institutes of Health get cut by $1.6 billion.
  • The Centers for Disease Control and Prevention are cut by about $323 million.
  • Border security is cut by about $581 million.
  • Immigration enforcement is cut by about $323 million.
  • Airport security is cut by about $323 million.
  • Head Start gets cut by $406 million, kicking 70,000 kids out of the program.
  • FEMA’s disaster relief budget is cut by $375 million.
  • Public housing support is cut by about $1.94 billion.
  • The FDA is cut by $206 million.
  • NASA gets cut by $970 million.
  • Special education is cut by $840 million.
  • The Energy Department’s program for securing our nukes is cut by $650 million.
  • The National Science Foundation gets cut by about $388 million.
  • The FBI gets cut by $480 million.
  • The federal prison system gets cut by $355 million.
  • State Department diplomatic functions are cut by $650 million.
  • Global health programs are cut by $433 million; the Millennium Challenge Corp. sees a $46 million cut, and USAID a cut of about $291 million.
  • The Nuclear Regulatory Commission is cut by $55 million.
  • The SEC is cut by $75.6 million.
  • The United States Holocaust Memorial Museum is cut by $2.6 million.
  • The Library of Congress is cut by $31 million.
  • The Patent and Trademark office is cut by $156 million.
Does the sequester have to go into effect?  Neither party wants it to go into effect due to the damage it will do to the economy - All that is required to remove it is a simple action of Congress to delete the sequestion bill and it will all go away.  It is legal - quick - and possible.