What is Sequestration?

What is Sequestration?

Unless you’ve had your head buried in the sand, you’ve likely heard the term “sequestration” bandied about over the past few months, with increasing urgency in recent weeks. If you check out the linked graph of Google search traffic for that word “sequestration” over the past 12 months you’ll see just what I mean.

So what exactly is sequestration and why are people going so crazy about it? Well, remember the fiscal cliff? That was only partly resolved back in January. Congress agreed on tax side of things but delayed action on the spending side for two months.

And guess what? It’s been (almost) two months.

As a reminder, the fiscal cliff was composed of two primary pieces. One was the expiration of the Bush era tax cuts. The other was $1.2 trillion in spending cuts over the next ten years. As you may recall, these spending cuts are a result of the failure of the Joint Select Committee on Debt Reduction to come to an agreement on deficit reduction during the fall of 2011.

This so-called “super committee” was formed as part of the debt ceiling negotiations in August of 2011. They were charged with coming up with a plant to reduce the deficit by $1.2 trillion over the next decade by November 2011 at the latest. But they didn’t.

The failure of the super committee to come to an agreement triggered automatic spending cuts (sequestrations) at the start of 2013. These spending cuts, which will average $110B per year, will fall evenly on domestic and defense spending.

The goal was to create a scenario that was unpalatable to both sides. Democrats would object to indiscriminate cuts to social programs and Republicans would object to indiscriminate cuts to defense spending, and so they would work together to find a more nuanced solution. But they didn’t.

And so here we are. January 1st came and went and Congress “solved” the problem by delaying sequestration by two months.

This week marks the end of two months and nothing (more or less) has happened. The good news is that Congress is actually heading back to Washington this week so perhaps they’ll actually get something done. But I’m not holding my breath.

What about you? Any predictions on the big showdown?

7 Responses to “What is Sequestration?”

  1. Anonymous

    The sequester will happen because there will be no immediate, dire affects that will impact the general public. The Government’s ability to support on-going programs and meet it’s obligations will be immediately impacted, but much of the pain is in time and long term money. It’s in the programs that will lose a lot of momentum and require more money and effort to get rolling again. It’s in the loss of temporary employees who, at least in our programs case, were brought on board to provide specific services at critical points in our schedule. It’s in the delays in contracting, where even if the money is currently available, they’re holding up activities because of uncertainty. Anyone who thinks this isn’t a big deal is kidding themselves. This BS is probably going to end up costing us more in current loss and future spending than anything it saves.

    The real critical point is at the end of March, with the continuing resolution. They’ll let the sequester hit and resolve it before then. If they don’t then there will be real pain and many of the dire consequences will become fact.

  2. Anonymous

    Citizen #5 — agree, and let those flight delays/cancellations happen. Those costs (funding the TSA jobs program specifically) need to be pushed onto the airlines, and hence the commercial airliners’ customers — not to the American taxpayer in general. Also, airports should be allowed to privatize security if they want.

    As for the flight-controllers, probably need a bump in GA registration so private pilots also help fund the controllers — though the largest costs should be born by the commercial airliners as a direct cost to them (again not a general taxpayer cost).

    All of these ‘indirect costs’ (hence general taxes) need to be converted into direct fees as close to the source as possible.

  3. Anonymous

    As a government worker, I think the sequestration will happen on March 1 and simply hope that something can be worked out before furloughs are needed in April. If furloughs are the solution, I will be most interested in seeing the affects it has on air travel. Many air traffic control facilities (primarily the busiest areas: NYC, Chicago, DC, ATL, Dallas, Miami, both SoCal and NorCal) are already working mandatory six day work weeks and trying to cut those from 12 days per pay period to 9 days per pay period will have a major impact on the number of flights worked on a daily basis. Flights will be grounded, delayed, even cancelled and it will leave many very upset travelers.

  4. Anonymous

    With the risk of sounding over-simplified, Austrian economists believe that the laws of economics that apply to your family also apply to the government whereas Keynesian economists believe the government is immune from these laws. Naturally, politicians find the views from the Keynesians more favorable to their own political careers, so Keynesian economics is what is taught in the vast majority of public schools and universities.

    With that said, I predict this Sequestration will be “solved” by making minuscule cuts (if any) with the promise of making some larger, undefined cuts in the future because the economy cannot handle any significant cuts today (which is BS, btw). I also predict that those future undefined cuts will never happen.

  5. Anonymous

    I think we’re all suffering from Congressional Drama fatigue. Personally, I’m sure sick of it.

    Let the chuckleheads throw the economy into another recession. Then maybe, finally the voters will wake up and throw the rascals out.

    A pox on both their houses.

  6. Anonymous

    I believe this entire matter has been orchestrated between the White House and the Congress so they can all blame each other while we all bite the bullet. Too bad none of them will be directly affected by the sequestration. At the mid year elections, they are counting on the voters short memory spans. Lets remember, and run them all, the good, bad and ugly, out of town.

  7. Anonymous

    Like so many of you, I have been watching & listening to news about the fiscal cliff since last summer. As a Canadian, (and believe me we have our share of politicians doing nothing or doing something dumb)I have to laugh at the US political system’s inability to get anything done. For the last year, it was nothing gets done in a an election year, and now it continues with the two sides not agreeing on anything. I do not understand why citizens at large and business leaders are not demanding movement. Your credit rating has fallen costing you billions in additional interest and the political system has become the laughing stock of the world. Other countries want democracy, but not the kind that exists in the US where the political leaders only care about themselves, not about their constituents or what is best for the country. You do not have a fiscal cliff problem or a financial problem, you have a political crisis that continues to worsen. Your system of government, like the 2nd amendment no longer works as it stands. It must evolve along with society and the needs of a changing county and world.

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