Dr. Stephen S. Fuller, economics professor and director for regional analysis at George Mason University in Virginia, said the results of sequestration “are bleak but clear-cut.”
“The unemployment rate will climb above 9 percent, pushing the economy toward recession and reducing projected growth in 2013 by two-thirds,” Fuller said. “An already weak economy will be undercut as the paychecks of thousands of workers across the economy will be affected from teachers, nurses, construction workers to key federal employees such as border patrol and FBI agents, food inspectors and others.”
The Department of Defense is facing particular problems. Leon Panetta said on Feb. 6 that the Pentagon is facing “the most serious readiness crisis that this country is going to confront in over a decade” as a result of sequestration.
If Congress fails to act, Panetta said, the department will be forced to absorb $46 billion in sequester reductions between now and Oct. 1, the beginning of the 2014 fiscal year, resulting in “a serious disruption in defense programs.”
“And now, if we’re spending at this rate and we suddenly have to hit reductions, we’re going to have to be able to take those deductions where?” he asked. “We’ve got to protect the war-fighters in Afghanistan. We’ve got to protect our force projection in the Middle East. There’s only one place that comes out of, and it’s readiness. And that’s what will happen.”
The DOD is prepared to furlough as many as 800,000 civilian workers for up to 22 days and they could face a 20 percent cut in their salary. Army training and maintenance will be reduced, placing about two-thirds of the active brigade combat teams outside Afghanistan at a reduced readiness level, placing more stress on those who are in the war zone.
Naval operations in the Western Pacific will be reduced by as much as one-third. The Air Force will face reduced flying hours and weapons system maintenance, placing flying units below acceptable readiness standards by the end of the fiscal year.
“This is no way to govern the United States of America,” Panetta said.
Obama and Republican congressional leaders have talked about taking steps to kill the sequestration but they appear miles apart on how to get the job done with the March 1 deadline looming. In a press briefing on Feb. 5, Obama repeated that a “balanced mix of spending cuts and tax reform is the best way to finish the job of deficit reduction.”
“Deep, indiscriminate cuts to things like education and training, energy and national security will cost us jobs and it will slow down our recovery,” Obama said. “It’s not the right thing to do for the economy — it’s not the right thing for folks who are out there still looking for work.”
The president said “modest” entitlement reforms that reduce the federal government’s health care expenses without shifting the costs to middle-class seniors, the working poor, or children with disabilities is worthy of consideration, along with “tax reform, so that the wealthiest individuals and corporations can’t take advantage of loopholes and deductions that aren’t available to most Americans.”
If Congress proves unable to settle on a package by March 1, the president suggested they adopt a smaller package of spending cuts and tax reforms “that would delay the economically damaging effects of the sequester for a few more months until Congress finds a way to replace these cuts with a smarter solution.”
Boehner on Feb. 6 rejected the delay option even though he said the sequester represents “a meat axe” approach to cutting the deficit. He indicated Republicans, who control the House, are only interested in enacting program cuts to reduce the deficit and avoid sequestration, noting that a tax hike was approved earlier as part of the negotiations.
“Listen, the American people believe that the tax question has been settled,” Boehner said. “They know the president called for a ‘balanced’ approach to the debt – a combination of revenues and spending cuts. And they know he’s gotten his revenue. The American people do not believe the president will use further tax revenues to lower the debt. After having seen this president attempt to spend his way into prosperity over the last four years, they know he’ll spend it.”
Neither Obama nor congressional Republicans have placed a comprehensive plan on the table. But several Republicans on the Senate Armed Services Committee have teamed up with GOP lawmakers in the House to offer the Down Payment to Protect National Security Act, a proposal to replace the $85 billion that would be lost this year under sequestration. Sponsored by Sen. Kelly Ayotte (R-N.H.) and Rep. Howard “Buck’’ McKeon (R-Calif.), the measure would freeze congressional wages for as long as a budget deficit exists and reduce the federal government’s civilian workforce by 10 percent over 10 years, mostly through attrition.
In the past, GOP lawmakers have offered options that include raising the Medicare eligibility age from 65 to 67 and changing the method used to calculate the benefits provided by programs like Social Security and Medicare. Lawmakers also cited potential savings coming from federal employee pension plans and shifting some Medicare costs to beneficiaries.
Some, like Sen. Dan Coats (R-Ind.), are insisting that entitlement reform take center stage.
“Let me be straight and say the things we are not supposed to say because it is political suicide — if we don’t reform Medicare, Medicaid and Social Security it doesn’t matter what else we do, we will not solve this problem,” Coats said.
“The real problem is finding the political will and courage to be honest with the American people and pass a fiscal package that will reassure investors, consumers and the world that the United States of America has finally taken the steps necessary to address the cause of our debt and put us on a path to return to fiscal soundness,” he said.