The effects of sequestration –
Although sequestration hit March 1, government offices remain open, looming furloughs have been delayed, curtailed military tuition assistance was reinstated and the federal government was funded through the rest of this fiscal year.
As a result, much of the ballyhoo surrounding sequestration seems distant, even unreal, like the clamor rising from heated disputes between opposing political parties over how to manage the federal debt. But make no mistake, the battle is real, lines have been drawn and the outcome is not completely clear yet.
So, what exactly is that dark cloud known as sequestration?
The battle is over how the federal budget - revenue from income taxes, payroll taxes, corporate taxes, customs duties and excise taxes - is spent.
Sequestration is an across-the-board series of automatic cuts to federal spending equal to $109 billion per fiscal year, originally signed into law as part of the Budget Control Act of 2011. The intent of sequestration was to rein in federal spending that has reached nearly $17 trillion.
Sequestration was originally slated to kick in Jan. 1 and cut $109 billion this fiscal year and each following fiscal years for a total of 10 years.
According to Jeffrey Zients, deputy director for management of the Office of Management and Budget, bipartisan majorities in the U.S. House and Senate voted for sequestration as a mechanism to force Congress and the president to work together on a balanced budget and further deficit reduction. Although the president signed the Act into law, sequestration was never intended to be implemented.
"Yet, a year and a half has passed and the Congress still has failed to enact balanced deficit reduction legislation that avoids sequestration," Zients wrote in a letter to House Speaker John Boehner.
Labeling sequestration a "blunt and indiscriminate instrument" Zients described the cuts required as deeply destructive to national security, domestic investments and core governmental functions.
Lawmakers delayed the start of sequestration and lowered cuts via a House continuing resolution that settled on $85 billion instead and gave agencies more flexibility with allocating their funds. That legislation expired March 27, but the House passed a second resolution providing funding through September.
Both resolutions are good news, but agencies will still have to trim programs and furlough employees in order to balance the federal budget as per sequestration over the next 10 years. Sequester cuts are slated to trim $109 billion each fiscal year and are supposed to amount to $1.2 trillion.
No programs are supposed to be cut; only scaled back under sequestration and cuts are supposed to be distributed evenly between domestic and defense programs, with about half affecting defense discretionary spending such as funds for purchasing weapons, base operations and construction.
Certain low-income programs like Aid for Women, Infants and Children and the Low Income Home Energy Assistance Program are subject to cuts while others such as Social Security, Medicaid, welfare and food stamps are exempt from sequestration.
Military salaries are exempt, but some benefits such as TRICARE will be affected for a small percentage of beneficiaries due to service area reductions.
Although widespread economic constriction has not been felt as a result of the sequester and the U.S. stock market recently rose to a record high in March, Defense Secretary Chuck Hagel said the sequester "is already having a disruptive and potentially damaging impact on the readiness of the force," during a speech at the National Defense University, Fort McNair, Washington D.C.
Defense Department maintenance, training, research and development, military capabilities and program costs will be impacted Hagel said during his speech. Federal civilian personnel will be furloughed for 14 days. A furlough, unpaid time off, may affect pay and leave accrual.
Hagel said furlough notices will be sent in early May and though he wished he had other options, the move would save the department an immediate $2.5 billion. Furloughs are expected to begin in June and last until Sept. 30.
Stephen Fuller, director of the Center for Regional Analysis at George Mason University, explained in an interview that the economic impact will be more visible after furloughs go into effect and after current government contracts expire as there is little money to renew those contracts.
"The full impacts of cuts this year won't be felt this year, but they'll be felt and will be measurable sometime in the future," Fuller said.
During a press conference, White House spokesman Jay Carney insisted that the effects of sequestration were hard to measure because budget cuts were a "moving picture."
"When you're dealing with these kinds of across-the-board forced budget cuts in the middle of a fiscal year and you're having to make all sorts of adjustments to account for them and to reduce your expenditures accordingly," Carney said, "that can be on the plus side where furloughs may take place a little later, or on the minus side where things may be more immediate.
"There are constant adjustments being made at each agency as they deal with their budget in terms of what the impacts of sequester are," Carney said. "But they are real."