This Friday a series of across the board budget cuts called “the sequester” are set to go into effect. The cuts have the potential to impact the lives of every American in a dramatic fashion in the coming years. However, according to new poll released today by Pew Research Center and The Washington Post, most Americans remain relatively unconcerned. Here are five things every American should know about the sequester, but probably do not.
#1: The sequester was never supposed to happen
The sequester was not passed a sensible way to cut spending. Indeed, the package was designed crudely to cut in such a way that it would force both parties to come up with a better alternative. The 8.2 percent budget cuts apply to every program whether those programs are working efficiently or necessary. Included in the package are cuts to programs that both parties would agree need to be funded in the future. The Congress was supposed to pass a more sensible package of spending cuts and/or revenue increases to replace the sequester, but have failed miserably in that pursuit.
The sequester was essentially Congress saying, “If I don’t take my bad tasting medicine, I will hit my hand with hammer.” Congress thus far has refused to take their medicine, and now they are about to break their hand as a result.
#2: The sequester may increase the deficit
The defenders of the sequester argue that cuts to government spending are necessary in order to balance the federal budget. However, if the sequester actually goes through it may increase the deficit.
First, the sequester will directly lead to the loss of thousands of jobs on the state and local level as school districts, fire departments, transportation departments, and other agencies receive less funding from the federal government. Those lost jobs will have a ripple effect across the economy, leading to an overall loss of up to one million jobs.
The new unemployed will generate less tax revenue for the federal government since they are no longer making an income. In addition, the unemployed may serve as a further drain on state and federal resources as many will be eligible for social safety net programs.
Secondly, in some cases the spending cuts will affect businesses. For example, the cuts to the Federal Aviation Administration (FAA) will lead the closure of dozens of small airports and hundreds of control towers. Passengers will experience more delays and cargo will not be shipped as efficiently. Ultimately the cuts will costs businesses money, which will reduce the GDP, which will reduce the amount of revenue the government collects as a percentage of GDP.
In the end, the result could be a higher deficit under the sequester than without it.
#3: Spending levels are already at historical lows
Many deficit hawks point to the whole number spending levels to argue that the federal budget must be cut. However, the most appropriate way to look at spending is as a percentage of GDP, which accounts for economic growth and inflation. For example, if the federal government spent $800 billion in 1950 that would actually be worth much more than the $3.6 trillion spent in 2012.
As a percentage of GDP, federal spending actually went down to 22.8 percent in 2012 from 24.1 percent in 2011 and 2010.
But once again even this misses the point, because what the sequester cuts is “discretionary” spending. Entitlement spending on programs like Social Security are left untouched by the sequester.
Discretionary spending, on programs like the Department of Education and FBI, are at their lowest levels since 1962.
#4: The deficit is shrinking
When President Obama came into office in 2009 the federal budget deficit sat at $1.4 trillion. In 2012 the deficit was down to $1.09 trillion, and in 2013 it is projected to be $901 billion – a 35 percent decrease over that time period.
The picture gets even better when looking towards the future. Under the spending cuts already passed, not including the sequester, the federal deficit is projected to go down by $4.5 trillion from 2013 through 2020.
Before Obama came into office the federal deficit was projected to be 7.8 percent of GDP in 2020. Under the revised projections, which include the current spending cuts and new revenues, the deficit is projected to be a much more manageable 4.8 percent of GDP in 2020.
Simply put, the deficit is already going down, but most Americans believe the contrary to be true.
#5: The Sequester will affect very popular programs
A recent Pew poll found that Americans want to keep funding levels the same for 18 out of 19 government programs such as education, health care, and defense. However, the sequester would cut many of these programs with no regard for the public’s wishes. Included in the unpopular cuts are:
- $11 billion in cuts to Medicare providers potentially limiting Medicare access for beneficiaries
- $4 billion in cuts to education funds (most of which goes to state and local governments)
- $318 million in cuts the Food and Drug Administration that will lead to slower drug approvals
- $51 million from the Food and Safety Inspection Service, leading to 2,100 fewer inspections
- $650 million in cuts to the FBI that will lead to weeks of furloughs for agents
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