Mandatory Federal budget cuts, or sequestration will probably kick in on March 1st. Although your world won't change too much when you wake up Friday morning, the impact over the course of the year could be pretty dire.
First, government spending is a component of GDP, so cuts will reduce economic growth, hurting job creation. Compounding that, Washington must approve the FY 2013 budget and issue the FY 2014 budget. It must also raise the debt ceiling in May.
If FY 2013 budget isn't approved by March 27, there could be another near-shutdown. The FY 2014 budget is normally published in early February. It's been delayed because uncertainty over sequestration and the FY 2013 budget make future planning difficult. The debt ceiling is usually raised without fuss. Instead, your elected officials are arguing over whether spending should be cut or taxes raised. Like bickering spouses, they are so caught up in who wins the argument that they aren't paying their bills. Who suffers? All of us.
And, this is the point of sequestration. The bickering spouses are trying to get your support for their side of the argument. Bit by bit, you will see services disappear. For example, cutbacks in FAA personnel could delay flights by 90 minutes in major airports starting in April. Cuts in the National Parks Service could turn them into ghost towns this summer. More than 40% of the cuts are in defense spending. The White House has released a report that shows how the cuts will affect each state.
Hundreds of thousands of Federal employees will be furloughed for one or two days a week. That's time off without pay, which most private-sector employees experienced after the financial crisis, from 2008-2010. During that time, Federal spending increased 19%, from $2.902 trillion to $3.456 trillion. This expansion was to stimulate the economy out of the recession, and it basically worked. The roughly 10% reduction from sequestration won't even take spending back to 2008 levels. Somehow the government provided services then, which is why many experts think the cuts aren't a big deal.
What It Means to You
Republicans and Democrats are counting on sequestration to show you how important the government is to your life. It's like the bickering spouses are trying to get the kids to take sides to win the argument. Instead, tell them to stop bickering and get to work!
- Economy Contracts in Fourth Quarter
- What Do You Think About the Debt Ceiling Debate?
- Background on the U.S. Debt Crisis