WASHINGTON, February 27, 2013 — In two days, the sequester is upon us. So that you can intelligently cope with the latest financial crisis that Congress has dumped on us, here is a handy guide that includes everything you ever wanted to know about the sequester but were afraid to ask.
What the heck is the sequester?
It is an artificial trigger for $85 billion worth of federal government spending cuts across the board in every department and agency that must be done by September 30. Think of it as the down payment on the $1.2 trillion targeted cuts scheduled for the next ten years under sequestration.
Is everything cut in the sequester?
Not everything. Here’s what spared: Social Security, Medicaid, supplemental security income, refundable tax credits, the children’s health insurance program, the food stamp program, and veterans’ benefits.
Whose bright idea was the sequestration?
It depends on whom you talk to. The Republicans blame President Obama, even though in his PowerPoint presentation called “Two Step Approach to Hold President Obama Accountable” in the summer of 2011, Majority Leader John Boehner took credit, saying sequestration would force Obama to deal with the Republicans.
However, journalist Bob Woodward in an op ed piece for the Washington Post says it was Obama’s brainchild. And the President says both parties dreamed this up to force the Republicans to raise the debt ceiling that year. So take your pick in the blame game.
Does the President have a plan to end the sequester? Republicans say no, but sorry, GOP, that’s a fib. President Obama has a plan and it is on the White House website and can be read there. It is called “Living Within Our Means: The President’s Plan for Economic Growth and Deficit Reduction.” Basically it spells out his $980 billion cuts in spending and $580 billion in cuts to tax loopholes for millionaires and corporations. There is also a one-page version.
But keep in mind that any financial plan has to start in the House of Representatives and then be sent to the Senate this year. The President’s plan can be shared and even used, but under the Constitution, he cannot initiate his plan into action. That is Congress’ job, one they have so far shirked.
Why did Congress wait till now to tackle this problem?
Congress and the President kicked the can way down the road to avoid having this as an issue during the 2012 Presidential election.
They also agreed to the appointment of a bipartisan Supercommittee to come up with a solution to the then impending debt default crisis and raise the debt ceiling by $2.3 trillion.
However, the Supercommittee wasn’t able to come up with a plan by the November 23, 2011 deadline, even ignoring the recommendations of the Simpson-Bowles Report, and that is what has triggered sequestration.
Does this have anything to do with the fiscal cliff back at the end of 2012?
Yep. The Bush-era tax cuts were set to expire on January 1, 2013 and automatic spending cuts were about to kick in at the same time. Everyone was scared that that combo would plunge the economy back into a deep recession, so a deal was struck, sort of a first payment on the sequester.
What was that deal?
It raised tax rates from 34% to 39.6% on those individuals making more than $400,000 a year and made the Bush tax cuts permanent for everyone else. It is estimated this will bring in $600 billion in new revenues within the next decade.
It also contained $4 billion in cuts to discretionary spending. And the two sides agreed to resolve the problem by March 1, which they have yet to do. Thus the sequester officially kicks in on Friday.
What happens in this game of chicken between the Republicans and Democrats if they still don’t raise the debt ceiling?
Then at the end of March, the government technically runs out of money and that basically means shuttering the government. Very shortly that would cause delays in Social Security checks, unemployment benefits, Medicaid payments, and even locking up the national parks and buildings. There would be more consequences, but that gives you a good idea. And ten to one, Moody’s would once again downgrade our credit rating, thus rattling the stock market and shaking our good faith and credit in world finance.
Why can’t Congress and President Obama sit down and get this done?
That’s the billion-dollar question. Supposedly sequestration was to force them to do just that. But as long as the House Republicans dig in their heels and refuse to raise revenues by closing tax loopholes in exchange for some entitlement changes, we are at an impasse.
So why aren’t Republicans paying attention to what Americans want?
Simple. While a solid majority of Americans voted for Obama and his plan of cutting spending and raising revenues, most Americans did not vote for the Republicans now in Congress. These lawmakers come from heavily gerrymandered districts that are controlled either by the Tea Party or the far Right of the GOP or they are in danger of being primaried by the Right if they do vote to raise revenue by closing tax loopholes on millionaires and corporations. Congressional Republicans are not answerable to the American public, only to their constituents back home. That is why they are ready to ride this bronco out of the chute.
OK, then why doesn’t Congress just call the whole thing off?
They can’t. Ok, they can, but that is a bigger recipe for disaster since Moody’s has indicated that it could downgrade America’s credit rating immediately if Congress decides to cancel the sequester. Moody’s will be watching to see if Congress stabilizes the economy and puts the brakes on the downward trend in the ratio of federal debt to GDP over the medium term.
If not, our credit rating will once again drop as it did in the summer of 2011, when the Grand Bargain that Obama and Speaker John Boehner (R-Ohio) crafted fell apart in Congress.
What do Americans think should be done?
Most Americans, according to the Pew Research Survey, by a huge majority — 76% —believe that the President and Congress should use a combination of tax increases and spending cuts to solve the problem. Only 19% agree with the GOP position that raising revenues are off the table.
If the sequester happens, who gets blamed?
Adding to the GOP angst, 49% of Americans would blame the Congressional Republicans if there is no deal by March 1, while only 31% would blame the President.
Who will get hit the hardest by the sequester?
Read Monday’s column for specific cuts: Sequester cuts: Your life is about to get worse
To see the impact on your own state, click on the WhiteHouse.gov site and scroll to the bottom of the page to where you will find a state-by-state reports showing the impact of the sequester. Just click on your state and read for yourself the costs to your state and maybe your job.
To contact Catherine Poe, see above. Her work appears in Ad Lib at the Communities @ WashingtonTimes.com. She can also be heard on Democrats for America’s Future. She is also a contributor to broadcast, print and online media.
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