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What's The Sequester? And How Did We Get Here?

Feb 22, 2013
Originally published on February 22, 2013 7:26 pm

They've been everywhere this week: dire warnings about threats posed by across-the-board federal spending cuts.

Unless Congress acts, the cuts are due to take effect a week from Friday. The administration is trying to drive home the ways that could affect you.

For example, Transportation Secretary Ray LaHood warned Friday that air traffic controllers will have to take unpaid days off beginning in April. Fewer controllers on the job could mean airport delays, and some airlines may decide to cancel flights.

"Look, this is very painful for us because it involves our employees," LaHood said. "But it's going to be very painful for the flying public."

LaHood, a former Republican lawmaker, says he has been calling some of his old colleagues in Congress, urging them to undo the automatic spending cuts.

But how much of this is just Washington hype? Here are the answers to four burning questions about the cuts known as "the sequester":

What will actually happen if these cuts do take effect?

President Obama has painted a pretty bleak picture of what will happen if Congress doesn't act to avoid the cuts: kids thrown out of day care; cancer screenings that won't be given. He even said criminals would be let go if the cuts take effect. There's a little bit of hyperbole there. Obama is trying to build public pressure on lawmakers, so he has an incentive to make the cuts seem as scary as possible.

Then there are Republican leaders in Congress, like Senate Minority Leader Mitch McConnell and House Majority Leader Eric Cantor, who say the White House could easily avoid such pain by just cutting wasteful projects. Cantor suggested doing away with a machine that smokes cigarettes for medical research. That's also a bit of a caricature. Republicans want to make it seem as though much of what the government does is useless or even silly.

In fact, we probably won't see criminals set free, no matter what Congress does or doesn't do. But these are real spending cuts. They won't be visible right away. The air traffic furloughs that LaHood mentioned, for example, wouldn't start until April. But eventually the cuts would be felt — and those effects would mount up over time.

Which areas of government will be hit hardest?

By law, these cuts are across the board: half defense, half other programs. Social Security and military pay are exempt. For the most part, Medicare is spared.

But most other parts of government will see their budgets cut. And there's not a lot of leeway for triage or moving money around. The way the law was written, each activity has to give up a similar proportion of its budget.

How will this affect the economy?

Well, it doesn't help. People's paychecks already took a hit this year when the payroll tax went up. They're paying more at the gas pump. And now, if the government tightens its belt, that's another blow to the economy.

But as the forecasting firm Macroeconomic Advisers said this week, it's not "catastrophic." It's not as bad as the "fiscal cliff" would have been, and certainly not as bad as breaching the debt ceiling. But it does take a bite out of economic growth — something in excess of half a percentage point.

And remember, the economy's not growing very fast to begin with. Slower growth means fewer jobs. Macroeconomic Advisers estimated we'd see about 700,000 fewer jobs by the end of next year if the sequester goes into effect and isn't changed.

So how did we get into this position? And how do we get out?

At heart, we got here because the two political parties can't agree on what size government we want or are willing to pay for.

Back in 2011, congressional Republicans demanded spending cuts in exchange for raising the debt ceiling. The two parties couldn't agree on that, so they punted and said if they couldn't make a deal by 2013, they would just do these automatic cuts that nobody likes.

In other words, the cuts were supposed to be a crowbar to pry open our gridlocked political process. But now it is 2013, the gridlock is still with us, and so we're using the crowbar to beat ourselves over the head.

If that gets painful enough, maybe lawmakers will agree to do something different. More likely, they will limp along until the next congressional deadline in late March. That's when the government's spending authority runs out. That would also be the next big showdown between the parties over what size government we want.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

We've been hearing dire warnings about threats posed by across-the-board federal spending cuts. Everything from defense to education would be slashed next week if Congress and the president can't make a deal. And the administration is trying to drive home ways that will affect you. Air travelers, for instance, could face delays of 90 minutes this spring, according to Transportation Secretary Ray LaHood, who said air traffic controllers will have to take unpaid days off, and that could lead to canceled flights.

SECRETARY RAY LAHOOD: Look, this is very painful for us because it involves our employees, but it's going to very painful for the flying public.

BLOCK: LaHood was formerly a Republican lawmaker, and he's been calling old colleagues in Congress, urging them to undo the automatic cuts. NPR's Scott Horsley joins me now here in the studio. And, Scott, we've heard that warnings. On the other hand, some Republicans say it's not going to be so bad. What would happen? What's the reality of what happens if these cuts take effect?

SCOTT HORSLEY, BYLINE: Well, you're right. We are hearing sort of different stories. The president himself painted a very bleak picture earlier this week when he talked about kids being thrown off day care, cancer screenings that wouldn't happen. He even said criminals would be let go if these cuts take effect. Now there's a little hyperbole there. The president is trying to ramp up the pressure on Congress, so he has a political incentive to make this all seems as scary as possible.

Then we have Republican leaders, like Mitch McConnell and Eric Cantor, who say the White House could easily avoid this kind of pain by just cutting some wasteful projects. Cantor, the Republican House leader, suggested maybe doing away with the machine that smokes cigarettes for medical research. So that's also sort of a caricature. Republicans want to make it seem as though a lot of what the government does is wasteful or even silly.

In fact, we're probably not going to see criminals set free if these cuts take effect. But these are real spending cuts. They won't be visible right away; the unpaid days off that Secretary LaHood was talking about, which start in April, not next Friday. But over time, those cuts will be felt and the cuts will be cumulative.

BLOCK: And, Scott, which areas of government are exempt and which will be the hardest hit?

HORSLEY: Well, that's just the thing. There's really not an opportunity for triage here. These are across-the-board cuts, half in defense, half in other programs. Now, Social Security is exempt. The military pay is exempt. And for the most part, Medicare will be spared. But most other parts of government are going to see their budgets cut. And the way the law was written, every activity has to give up a similar proportion of its budget.

BLOCK: And what are you hearing, Scott, about the effects on the economy?

HORSLEY: Well, this doesn't help. We've already seen people's paychecks take a little bit of a hit this year when the payroll tax went up. People are paying more at the gasoline pump. And now, if the government is tightening its belt, that's another blow to the economy. Now as the forecasting firm Macroeconomic Advisers said this week, this is not catastrophic. It's not as bad as the fiscal cliff we were talking about at the beginning of the year. It's certainly not as bad as breaching the debt ceiling would be. But it does take a bite out of the economic growth, and we weren't growing that fast to begin with. Slower growth means fewer jobs. One forecast estimated we will see about 700,000 fewer jobs by the end of next year if the sequester goes into effect and isn't ever repealed.

BLOCK: Walk this back just a bit, Scott, and remind us how we got into this position in the first place.

HORSLEY: Well, at heart we're in this position because the two political parties can't agree on what size of government we want and are willing to pay for. Back in 2011, the Republicans in Congress demanded spending cuts in exchange for raising the debt ceiling, and the two parties couldn't agree on how to do that. So they punted and said, well, if we can't make a deal by 2013, we'll just have these automatic cuts that nobody likes. In other word, these cuts were supposed to be a crowbar to pry apart our sort of gridlocked political process. Now, 2013 has arrived, the gridlock hasn't gone away. And so we're using the crowbar to sort of beat ourselves over the head with.

If that gets painful enough, maybe the lawmakers will agree to do something different. But more likely, they're just going to kind of limp along until the next deadline in late March. That's when the government's spending authority runs out, and it would be the next big showdown between the parties.

BLOCK: OK. NPR's Scott Horsley. Scott, thanks.

HORSLEY: My pleasure. Transcript provided by NPR, Copyright NPR.