News Column

Not All Will Feel Impact of Sequestration Cuts

Feb. 22, 2013

David Lightman

capitol with money

Don't be too frightened by the doomsday talk about the automatic spending cuts that look more and more likely to kick in next week.

There would be pain, to be sure, with some federal workers taking unpaid furloughs, some programs cut and as many as 700,000 jobs nationwide left uncreated.

But programs that touch millions who rely on government checks most, including Social Security recipients and the poor, will not be affected. For the rest, the impact of cutting $85 billion from federal spending, called a sequester, won't be felt all at once and in some cases may not kick in for some time. And there may even be escape clauses: If the cuts provoke a huge public outcry, a Congress where most incumbents are seeking re-election next year can undo at least some of the damage.

Even the political fallout is hard to calculate. If the economy keeps growing, those lawmakers next year could point to the sequester as a boost. After all, constituents want the nation's debt reduced, a sizable minority is for proceeding with the cuts, and people are tired of Washington fumbling and delaying efforts to take serious steps.

So despite the White House's warning that chronic suffering is nigh, the impact will not be universal and depends on the agency, the program and the politics.

"The sequester affects different programs differently," said Sharon Parrott, a vice president at the Center on Budget and Policy Priorities, a budget research group.

Prospects for avoiding the March 1 sequestration are dimming. The Democratic-run Senate plans to vote on its partisan alternative next week, a plan that would reduce the amount of spending reductions while raising more revenue. It has no chance of winning approval in the Republican-run House of Representatives.

The impasse probably means the cuts will take effect, and many Republicans have signaled they're perfectly willing to let that happen.

What's coming first, though, is a week of more chilling scenarios and finger-pointing. But assessing the true impact depends on the answers to questions that right now are difficult to resolve with any precision:

-- How and when will people feel the changes?

Macroeconomic Advisers, a St. Louis-based research firm, paints a grim, but not too grim, picture. By the end of next year, it estimates, about 700,000 fewer jobs would have been created than might have been expected.

But, the analysis added, "The macroeconomic impact of the sequestration is not catastrophic."

Big chunks of the budget are exempt, notably Social Security, Medicaid, veterans benefits, the Children's Health Insurance Program, Pell grants for students, and a host of programs that help the poor. Medicare spending is not subject to the entire reduction.

The cuts, which amount to about 2.4 percent of roughly $3.55 trillion in total federal spending, are focused on a smaller part of the budget. About half come from defense, which would be trimmed about 13 percent, and half from some domestic programs, which would lose 9 percent of funding. There are lots of variables. Some agencies are said to have saved money in recent months, thereby easing the potential impact, and timing of the cuts varies.

-- Can Congress quickly and easily undo the damage?

Maybe. All government funding runs out March 27, so lawmakers are working on a massive spending plan to avoid a shutdown, a plan that could restore some cuts.

Congress also could pass other, separate spending bills, called appropriations, that detail where funds should be spent. There's hope on Capitol Hill that a defense bill will do just that, and some talk that should a program's cuts cause an outcry, lawmakers could add money in other spending legislation.

Source: (c)2013 McClatchy Washington Bureau Distributed by Mclatchy-Tribune News Service.

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