The sequester hits: What happens next?
The sequester — which begins with $85 billion in across-the-board spending cuts spread out over the rest of the year — takes effect today, and as you may have noticed, the world is still spinning on its axis. The White House has warned that the cuts, which are divided equally between the Pentagon and non-defense discretionary spending programs, will have a dramatic impact on hundreds of thousands of people's lives, though it will be hard to notice at first. (Imagine the old story about the frog in a pot of ever-so-slightly warming water who can't tell he is slowly being boiled alive.) But how does the sequester work exactly? And what can we expect from Congress in the coming months?
The sequester begins with a bureaucratic flutter. According to Darren Samuelsohn and Ginger Gibson at Politico:
Sequestration officially starts Friday — most likely at 11:59 p.m., though Obama could act sooner — when the Office of Management and Budget issues a notice ordering agencies to make cuts of about 9 percent for most nondefense programs and about 13 percent for defense programs. [Politico]
This is what experts expect in the next couple of months: Food programs for the poor and rent assistance will be cut; federal employees, from the EPA to the Bureau of Prisons, will be furloughed; defense contractors will announce layoffs; states will be notified that their education and housing grants will be reduced; teachers will be fired; small airports will be shut down and flights will be canceled; meat-processing factories, lacking federal inspectors, will close, and meat imports will shrink.
The damage will accumulate in less visible ways, as irrational reductions in public spending impede economic growth and job creation; reduce investments in education, infrastructure and scientific research; and further disrupt the routines of a modern democracy. The longer the sequester remains in place, the more harm is inflicted…
Planning, recruiting personnel and drafting long-term contracts have become impossible in areas from cybersecurity to embassy security to medical research to homeland security, damaging not industries rife with waste, fraud and abuse but critical services. [The Washington Post]
All told, nonpartisan economists say the sequester will likely knock at least half a percentage point from GDP growth this year, and cause thousands of private and public job losses. "In other words, the sequester would hit exactly when you wouldn’t want it to, just as the slowly strengthening economy is struggling to shake off other drags on growth," says Jim Tankersley at the Post.
Considering Congress' inability to reach a deal on budget issues, it's also likely that we may see a total government shutdown later in March, the deadline for lawmakers to reach an agreement authorizing government funding for the next fiscal year. That would produce the immediate, light-switch effect of federal agencies closing up shop and national parks closing. As Matthew Yglesias at Slate notes:
The real issue is that the Continuing Resolution that funds the discretionary functions of the government expires on March 27. If that expires with no replacement we get a government shutdown — you'll notice that. [Slate]
The game in Congress, then, is to see which side blinks first. The Obama administration is reportedly confident that the GOP — pressed by Republican governors, businesses, defense hawks, and public opinion — will be forced to negotiate. House Republicans are similarly upbeat, cheering Speaker John Boehner's refusal to entertain any deficit agreement that would raise new tax revenue. Boehner reportedly thinks he can outlast Obama, "whose political fortitude he questioned publicly and privately," reports Ashley Parker at The New York Times.
And as many observers have noted, it may turn out that Congress does nothing at all. Republicans are happy to have their spending cuts; Democrats are hesitant to start new budget negotiations that could result in cuts to Medicare and Social Security. There's little room in that equation, sadly, for the meat-processing inspectors of this world.