The word "sequestration" is one way to avoid the much more negative term: "across-the-board" budget cuts. The U.S. is about to have a bad case of national heartburn if the government cannot agree on an alternative budget plan before March 1, 2013. According to a Feb.21 New York Times article, that is the day when fiscal year 2013 federal discretionary funds will be cut by $85 billion over seven months.
Discretionary spending requires an annual congressional review and covers programs, agencies and services like the FBI and FDA. A vast part of the U.S. federal government depends on discretionary funds.
There will be some cuts in mandatory spending programs too. These are spending programs that do not require annual congressional review.
Non-defense programs would lose 9 percent of discretionary funding for the rest of the year. Defense programs will lose 13 percent of discretionary funding over the same period.
The budget cuts do not allow departments to cut funds for the least effective or necessary programs. Program directors must cut everything by an equal amount, no matter how essential the program, product or service happens to be.
The Congressional Budget Office (CBO) confirmed that the budget cuts would cost jobs and slow economic recovery. According to A Feb.13 Huffington Post article, CBO Director Douglas Elmendorf said the budget cuts would reduce economic growth by at least 0.6 percentage points and job growth by 750,000 jobs.
Social Security, Medicare and Veterans Administration programs are exempt from discretionary spending cuts. However, discretionary spending programs associated with seniors, the disabled and veterans will lose funding.
Federal employee furloughs could start happening in April. The Secretary of Defense gave Congress his furlough notice on February 20. The furloughs can begin 45 days after that date, or on April 6. This is when the federal government could order 800,000 civilian employees to go on periods of unpaid leave. States, counties and cities would also furlough employees or let them go.
Unemployment recipients will see a 9.4 percent cut beginning with their March 7 paychecks. Doctors who care for Medicare patients will see smaller checks.
Intergovernmental transfers are the key to a lot of discretionary funding that supports state and local programs. Most counties and cities rely heavily on federal discretionary funds and few, if any, can do without them.
Federal funds are transferred to state and local governments for a long list of programs and services like education, road and bridge construction, public health management and law enforcement. Medicaid, food stamps (now called STAMP) and other programs for the poor are at risk. Add in support for water treatment facilities, parks management and disaster response systems. Meals on Wheels, border security, food inspections and weather monitoring would also take deep funding cuts.
Many Americans from all levels of society depend on federal discretionary funding programs. Anyone who has pending business with the government should check with the appropriate city, county, state or federal agencies to find out if the funding cuts will affect their business, legal or personal affairs.