Sequestration: So Much For The Tired & The Poor

by Lynn B. Johnson on May 13, 2013

Budget CutsWhen sequestration’s automatic budget cuts went into effect on March 1 of this year, many were unclear as to how these cuts would affect daily life and social programs. We were told that although the sequester would reduce the federal budget deficit by $1.2 trillion dollars over 10 years —as required by the Budget Control Act of 2011, which was enacted in part to resolve the debt-ceiling crisis— the cuts would not go into effect immediately.

Well, it’s two months later and few people seem to be talking about where these cuts are headed, so Wallet Blog did some investigation.

It seems the Office of Management & Budget (OMB) was on to something last year when it reported that while “the sequestration itself was never intended to be implemented,” doing so would be “deeply destructive to national security, domestic investments, and core government functions.”  Sequestration’s “harmful” cuts are evenly divided between defense and domestic spending. The defense cuts equal $42.7 billion. Domestic spending cuts are split between Medicare ($9.9 billion) and all other domestic cuts ($32.7 billion).

We’re actually getting off easy with only $85.3 billion in spending cuts this year since January’s “fiscal cliff” legislation postponed the sequester’s onset until March 1. All other years —until Congress and President Obama choose to agree on a resolution to end the cuts— we’ll have annual spending cuts of $109 billion.

UNEMPLOYMENT

The non-partisan Congressional Budget Office estimates these cuts will affect the creation or retention of nearly 750,000 jobs nationwide by the end of 2013 (including reductions in armed forces).  Unfortunately, these cuts are also affecting the size of federally-funded extended unemployment benefits: states are required to cut monthly disbursement amounts by as much as 17.69% (California). If the typical weekly unemployment check is $300, these cuts will reduce that amount to as little as $246.93, depending upon where you live. This will also affect the economy as a whole, seeing as economists have estimated that every $1 in unemployment assistance nets a $2 return-on-investment through increased economic activity.

TAX FRAUD

While the sequester hasn’t forced the IRS to lay off workers (as was originally feared), the agency is mandating one work furlough day per pay period for its employees.  This will undoubtedly hamper its efforts to combat fraud and offshore tax evasion, with billions of dollars on the line.  The IRS closed more than 200,000 cases of identity theft during the first quarter of 2013 when at full strength; how could losing of days upon days of manpower each month not have negative repercussions?

CHILDHOOD EDUCATION

Even those who do not pay taxes will feel the heat. In February, the White House announced that up to 70,000 children “would be kicked off Head Start,” risking 10,000 teacher jobs as well as funding for up to 7,200 special education teachers, aides, and staff. Special education will lose $644 million, or 5% of its funding.

Incidentally, an amendment that would have reversed the sequester’s impact on special education– fell six votes short of passing in a March vote. Every Yea was a Democrat. Every Nay was a Republican. We can therefore only expect a surge in long, resource-sucking lawsuits as families fight to ensure their children receive the schooling they need.

HUNGER ABATEMENT

What about the hungry? In the next six months, an estimated 600,000 women and children will be dropped from the Women, Infants, and Children (WIC) food and nutrition service that supports low-income women and children up to age 5 with nutritious food. This will also result in the loss of at least 1,600 state and local jobs. Meals on Wheels and other federally assisted programs that feed needy seniors – many of whom are ill, frail, and/or homebound – will also have to reduce its output by some 4 million meals.

HEALING THE ILL

Already, sequestration cuts are being felt by the ill, who are in turn putting the heat on Congress. On April 2, Sen. Pat Toomey (R-Pa.) sent a letter to Department of Health and Human Services Secretary Kathleen Sebelius, urging her “to administer the [sequestration] cuts in a manner which protects beneficiary access to critical oncology services.” The cuts are causing private cancer clinics to turn down Medicare patients. Estimated cuts to the AIDS Drug Assistance Program could result in 7,400 fewer patients receiving their HIV medications.

So, if you’re thinking that sequestration is no big deal, please keep in mind that for many, these budget cuts are literally the difference between life and death.

Sequestration: So Much For The Tired & The Poor

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