For once he's right. President Obama came out blasting against the upcoming sequestration as a major threat to the U.S. economy. He's right. These draconian cuts, $85 billion for FY 2013, will be enacted starting in March 2013 if Congress doesn't stop it. The CBO estimates this year's budget costs will cost the United States a full 1.5 percentage points of GDP.
We project that inflation-adjusted gross domestic product (GDP) will increase by about 1½ percent in 2013, but that it would increase roughly 1½ percentage points faster than that if not for the fiscal tightening. With that slow growth, we expect that, under current laws, the unemployment rate will stay above 7½ percent through next year. That would make 2014 the sixth consecutive year with unemployment so high, the longest such period in 70 years.
America has Congressional manufactured crisis budget cut fatigue. Crazy people, posing as Congressional representatives, go on national TV to say up is down and black is white when it comes to the economy. You do not cut government spending in a fragile economy, that's economics 101. You do confront corporate greed sucking all of the money out of middle class pockets to help balance the budget deficit. That's morality 101.
Why Congress, in particular Republicans, insist on killing the economy by self-inflicted gunshot is anyone's guess. Who else is sick to death of fictional spin and fuzzy math? We have more analysis on the damage wrought by sequestration. Macroeconomic Advisors estimates the GDP loss is only 0.6 percentage points and, oh my, only 700,000 more jobs will be lost in their analysis.
What budget cutting crazies failed to realize, unemployment begets....more federal debt due to decreased revenues. It's a self-feeding cycle. All of those fired people will need unemployment benefits, which adds to the federal debt. . The Bipartisan Policy Center estimates over 1 million jobs will be lost due to the sequester. Already the DoD is giving furlough notices to 800,000 civilian workers. Those are middle class jobs at the DoD. The impact is so bad, the agencies which measure the economy will be affected. What a way to cope with bad economic policy, simply get rid of the people who quantify the results.
To most these figures of reduced GDP and unemployment rates are abstract, simply numbers. Once the cuts go into effect, only too late will the effects be realized and the damage to workers and the economy is done. A hearing from the Senate Appropriations Committee spells out the specific economic harm sequestration will bring:
A five percent cut this late into the fiscal year often translates into a double whammy for our agencies because fixed costs like rent and utilities can't be cut. The big cuts will be to salaries, which means furloughs, layoffs, and services not delivered to the American public. And I want to remind everyone -- additional cuts will come due when Congress acts on the expiring CR. The Fiscal Cliff deal cut $4 billion from fiscal year 2013. Offsets to Hurricane Sandy cut another $3.4 billion. These cuts will have to be enacted when Congress acts on the expiring CR in March.
To most people, sequester sounds like very technical 'accounting speak,' but the bottom line is sequester cuts programs and sequester hurts people. Let me give you some examples Sequester will mean job cuts not just for people who work directly for the Federal government, but also for those people who work because of the Federal government. These are the jobs of people who keep our communities safe:
- 15,000 traffic controllers would be furloughed for more than two weeks;
- 5,000 fewer border patrol agents;
- 1,000 fewer FBI, DEA, ATF agents and US Marshals to combat violent crime and terrorism here in the US;
- Front line law enforcement personnel of the Department of Homeland Security would be furloughed for at least 14 days;
- 1,300 fewer correctional guards and correctional staff to securely confine inmates in Federal prisons;
- 2,100 fewer inspections of food manufacturers to keep us safe from illnesses like E.Coli and Salmonella; and,
- 1,000 jobs lost that design, build and operate weather satellites. This delays the launch of next-generation weather satellites by two to three years and puts emergency managers at risk of not having forecasts, watches, and warnings during severe weather.
Sequester devastates education and health care
- Cuts Federal special education support for 7,200 school staff including teachers, aides and administrators for special education students, shifting these costs to state and local taxpayers;
- Slashes Federal Title I support, meaning more than one million fewer students will be served in high-poverty schools;
- Women, Infants and Children (WIC) would be cut by more than $300 million. This means that 600,000 low-income women and children won't get nutrition assistance.
- Four million fewer meals for Seniors; and,
- Nearly 7,400 patients with HIV will lose life-saving treatment.
Sequester delays Social Security services. While Social Security is mandatory and seniors will still get their checks, Social Security offices would have reduced hours, and some additional offices would close altogether. This would delay benefits for the 8.2 million Americans filing for retirement and disability benefits this year.
"The Pentagon will eliminate 46,000 temporary civilian employees. That's just the tip of the iceberg. All of the Department of Defense's 800,000 employees will be furloughed one day a week for the rest of the year, and 30,000 Navy shipyard and maintenance employees would be laid off.
In the intelligence community there will be furloughs for the intelligence workforce, resulting in reduced collection of national intelligence. Intelligence analysis, our physical security, and our national security will be at most risk.
Additionally the great sequestration doesn't do jack long term for the federal debt as shown below by the Bipartisan policy center's graph. Sequester only delays the federal debt reaching 100% of U.S. GDP by two lousy years.
Over and over again the cut choices are not choices at all. Reducing health care costs to level all other industrialized nations pay is a budget deficit act. Yet over and over, Republican or Democrat, enacting single payer, universal health care is not on the table as a deficit reducer, which it is. There are many other examples where deficit reduction could be done and even have a lasting impact, unlike the sequester. That's the absurd thing about all of this. While Congress makes sure our economy tanks once again, the long term debt reduction from the Congressional hatchet job on the economy is next to nil. It is suffering without reason.
Will economic sanity and reality ever return to Congress? Not unless all voters, conservative and liberal alike demand it. As it currently stands Congress is determined to take the economy hostage once again. The odds of sequestration happening are being put at 70% with nine days to go.