- Last Updated on Tuesday, 18 September 2012 20:48
- Published on Tuesday, 18 September 2012 20:48
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It’s called Sequestration. You’ve seen the term in dozens of articles. It’s been talked about on Fox, CNN, and all the other major news organizations. But, what, exactly, does sequestration mean, and a fair question, “why should I care?” It sounds like just another invented government word that only someone in the Washington establishment is likely to understand. Normally, I would say, yes, that’s about it, but in this case, sequestration has the potential of substantially impacting government operations. And this could include spending and jobs in our area.
Sequestration, strangely enough, is not a new term. It was first used in a long forgotten budget cutting bill enacted in the 1980’s called “Gramm Rudman Hollings.” This legislation was created to deal with what was then considered an astronomical deficit of $2 Trillion. What it did was to apply cuts to existing programs across the board. Alas, it wasn’t that effective a tool. Congress, and President Reagan were enacting bigger and bigger budgets and sequestration, which was much smaller than the increases, just couldn’t keep up.
But, now it’s 2012, and instead of a $2 Trillion budget we have a $16 Trillion deficit. That’s what prompted the Congress in 2011to come up with some kind of agreement to cut the deficit. First, they tried to reach agreement through a regular budget bill. Something that combined tax increases with spending cuts. This was called the “grand bargain.” But it never happened.
The Democrats wanted tax increases in the mix and the GOP didn’t. So, the compromise was a bill called the Budget Control Act of 2011. The first thing it did, commendably, was cut the level of discretionary spending. This was a modest reduction that almost no one noticed. Then, there was the heart of the bill, the creation of a “super committee” of six senators and six house members that was charged with identifying $1.2 Trillion in cuts over 10 years. Alas, the taxers and the non-taxers held their position, no one compromised, and the super-committee failed. At which point, like the sword of Damocles along comes sequestration.
Sequestration, an awful government word if ever there was one (it sounds like a medical procedure), automatically cuts the budget by $1.5 Trillion over ten years. The first chunk of cuts, if Congress doesn’t do anything to stop the legislation, begins January 3. The amount the government will have to trim from the budget, in 2013, is $109 Billion which will be equally split between defense and non-defense spending. Further, the President was directed, in a bill called the Sequestration Transparency Act to provide a program by program accounting of what programs will be cut and how. At this writing the Administration has not released that report. However, since the cuts will come three months into the fiscal year and will have to come from unobligated monies the impact is going to be magnified considerably.
For example, the Defense Department, our area’s largest employer either through direct employment or contractor, says it will have to make an eleven percent cut. The priority, of course, would be to continue to support our troops in the field. That means the cuts will likely involve reductions in research programs, aerospace programs, and a host of new weapons systems. Companies that could be affected include Lockheed Martin Corp., Raytheon Co., Boeing Co., Northrop and General Dynamics. Each of these companies and several more, have a presence in Virginia. Sequestration could also mean furloughs for civilian employees, and a stop work orders on a host of smaller companies as well. Several defense companies, seeing no sign that sequestration will be repealed, are preparing to issue termination notices to their employees. The potential impact, at the Naval base, to those of us who work up North, or further south, could be significant.
In the civilian sector the pain is spread a little more broadly, but the results, because of the timing of the bill and the way it will be implemented, will have similar effects. Contracts of all sorts, from work on roads, to improvements to the national parks, will likely be curtailed or cancelled. Furloughs are likely and traditional government services, opening hours at parks, for example, may be reduced. However, Veterans benefits, Social Security, Medicare, and Medicaid payments, won’t be affected.
There is talk of repealing sequestration. Almost every Congressman and Senator now says they want to stop it. Amazingly, however, they act as if sequestration came out of nowhere. But, just in case they forgot, Congress voted for the bill that contains sequestration. Rob Wittman, our Congressman was an “aye” vote for the Budget Control Act and sequestration. Maybe he shouldn’t have.
Now, however, with the hour fast approaching when the harshest measure of this bill kicks in, Congress, and the President, but mostly Congress, are rushing to find ways to postpone or modify the bill. That might be a good idea. Maybe the proposed cuts are too much at once. But, that said, maybe they aren’t comprehensive enough or well thought out either. And they certainly don’t represent any kind of compromise. At worst it’s a meat axe approach to a much bigger problem. While at best, its simply sloppy legislating.