Friday, March 01, 2013

Budget Sequestration In Effect; Just 27 Days Until Next "Crisis"

Mar 1: March 1 has arrived and the self-imposed budget sequester of $85 billion in Fiscal Year (FY) 2013 spending goes into effect despite the fact that most everyone agrees it will cause a critical disruption to the U.S. economy [See WIMS 2/26/13]. The National Association of Manufacturers (NAM) and Texas Instruments have said the cuts are a "self-inflicted body blow" to the American economy [See WIMS 2/11/13]. Yet, with very little effort on the part of Washington Democrats and Republicans to avoid the "crisis", the disruptive cuts were allowed to go into effect. Because government moves slowly, it will take some time for the impacts of the sequester cuts to be felt. A last minute meeting called by the President for today (March 1) with House and Senate leadership will have little meaning, as the House and Senate have adjourned and left town. The President is required by law to order the sequester by the end of the day.
    Now, there are just 27 days until the next major, self-inflicted budget crisis -- the Continuing Budget Resolution (CR) -- which was put off until March 27, because no agreement could be reached. If not addressed, or put off again, the Federal government will shut down. Then, its just a few more months until Washington again deals with the debate over raising the "debt ceiling" again.
    President Obama issued a statement on the sequestration saying, "Today, Republicans in the Senate faced a choice about how to grow our economy and reduce our deficit. And instead of closing a single tax loophole that benefits the well-off and well-connected, they chose to cut vital services for children, seniors, our men and women in uniform and their families.  They voted to let the entire burden of deficit reduction fall squarely on the middle class.

    "I believe we should do better. We should work together to reduce our deficit in a balanced way – by making smart spending cuts and closing special interest tax loopholes.  That's exactly the kind of plan Democrats in the Senate have proposed.  But even though a majority of Senators support this approach, Republicans have refused to allow it an up-or-down vote – threatening our economy with a series of arbitrary, automatic budget cuts that will cost us jobs and slow our recovery.

    "Tomorrow [March 1] I will bring together leaders from both parties to discuss a path forward. As a nation, we can't keep lurching from one manufactured crisis to another. Middle-class families can't keep paying the price for dysfunction in Washington.  We can build on the over $2.5 trillion in deficit reduction we've already achieved, but doing so will require Republicans to compromise.  That's how our democracy works, and that's what the American people deserve."   

    At 11:30 AM today, the President delivered a lengthy statement and held a press briefing answering detailed questions from reporters on the process which lead to the sequester, the anticipated impacts, and the future prospects of budget negotiations with Congress. He said, in part:
"As you know, I just met with leaders of both parties to discuss a way forward in light of the severe budget cuts that start to take effect today.  I told them these cuts will hurt our economy.  They will cost us jobs.  And to set it right, both sides need to be willing to compromise.

"The good news is the American people are strong and they're resilient.  They fought hard to recover from the worst economic crisis since the Great Depression, and we will get through this as well.  Even with these cuts in place, folks all across this country will work hard to make sure that we keep the recovery going.  But Washington sure isn't making it easy.  At a time when our businesses have finally begun to get some traction -- hiring new workers, bringing jobs back to America -- we shouldn't be making a series of dumb, arbitrary cuts to things that businesses depend on and workers depend on, like education, and research, and infrastructure and defense.  It's unnecessary.  And at a time when too many Americans are still looking for work, it's inexcusable. . .

"The longer these cuts remain in place, the greater the damage to our economy -- a slow grind that will intensify with each passing day. . . I do believe that we can and must replace these cuts with a more balanced approach that asks something from everybody:  Smart spending cuts; entitlement reform; tax reform that makes the tax code more fair for families and businesses without raising tax rates --  all so that we can responsibly lower the deficit without laying off workers, or forcing parents to scramble for childcare, or slashing financial aid for college students.

"I don't think that's too much to ask.  I don't think that is partisan.  It's the kind of approach that I've proposed for two years.  It's what I ran on last year.  And the majority of the American people agree with me in this approach, including, by the way, a majority of Republicans.  We just need Republicans in Congress to catch up with their own party and their country on this. . ."

    Access a 2/28 statement from the President (click here). Access the 3/1 statement from the President and responses to questions from the press (click here). Access the White House blog posting on the Sequester impacts, background and links to the state by state reports (click here). Access the Senate Appropriations Committee, "Impacts of Sequestration" website with agency letters and testimony (click here). Access the House Appropriations Committee Democratic report of February 13, 2013, on sequestration for more background and details (click here). Access the House Republican's website on the Sequester (click here). [#All, #MIAll]

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