NC: Sequestration Arbitrary Spending Cuts Scheduled to Start March 1

Arbitrary Spending Cuts Scheduled to Start March 1

National Council February 25, 2013

Unless Congress and the President reach agreement on an alternative plan by this Thursday, $85 billion in arbitrary, across-the-board spending cuts go into effect, causing disruptions for governments, nonprofits, and ordinary citizens in every community across the country. The cuts, known as sequestration, are the result of a budget deal in 2011 that purposefully designed cuts so painful that politicians would be forced to compromise - a result that appears unlikely at present. This week the Senate is expected to consider competing bills, one by Democrats and another by Republicans, to prevent sequestration, but due to a combination of partisan and procedural reasons neither is expected to pass. No votes are expected in the House prior to the cuts taking effect.

Despite the apparent impasse, pressure is building for Congress to take action by the end of March. The Congressional Budget Office recently predicted that the sequester will cost 750,000 jobs, changing the debate from arcane budget terms to the impact on real lives. This weekend, the White House released state-specific details of what the cuts mean in terms of local jobs and services to individuals.

Starting March 1, federal agencies will inform governors, private contractors, grant recipients, and other stakeholders of the dollars they will lose. But realistically, it will take a few weeks for most of the cuts to be felt. That timing coincides with the expiration of the current “Continuing Resolution” on March 27, at which time authority for funding the entire federal government runs out, forcing Congress to enact legislation to prevent the government from shutting down.

Some observers are predicting that the threat of a shutdown, rather than the sequester, will be the sufficient impetus to get Congress and the President to finally reach agreement on a deal to address the recurring fiscal challenges.