If Congress does not act between now and March 1, 2013, a number of automatic, across-the-board spending cuts will take effect. Many Americans favor more spending cuts, but, as seen below, what happens in Washington can greatly impact the lives of everyday Americans. The spending cuts, commonly called the sequester, are part of the Budget Control Act passed in 2011. The sequester was designed to force the Congress to implement alternative spending cuts to raise the debt ceilings, but since then Congress has not found alternative cuts or new revenue to replace the sequester. According to the Washington Post, as of today there is little chance of a deal being made to avoid the sequester.
As seen below, the worst impacts from the sequester will not be direct, but indirect in nature. For example, most Americans are far more likely to feel the negative economic impacts of the sequester spending cuts as opposed to the spending cuts to a particular agency. Here is how the average American will be impacted if the sequester takes effect in eight days.
The sequester will directly result in thousands of job losses and could indirectly result in as many as one million lost jobs. The massive 8.2 percent cut to non-defense programs will force many government agencies to cut back on staff as detailed by this Office of Budget and Management Report. Thousands of government workers will be laid off in the coming months and many more will face furloughs. Most Americans may think this does not affect them. However, when government workers are unemployed, or working less, they tend to spend less, which hurts everyone in an economy that is driven by consumer spending.
For example, if former government workers spend less at retail stores those stores owners may cut back on their employees, or not hire workers they otherwise might have employed. If retailers start having backed up inventory they will cut back on their orders, and that affects the factories supplying those stores as well as the workers at those factories.
So when the sequester forces thousands of government workers to lose their jobs, it really affects non-government workers as well. One study concluded that the sequester may result in the loss of over one million jobs from 2013-2014.
These job losses will affect even those who have a job, as the flooded job market will reduce the leverage employed workers have to negotiate for pay raises and/or better benefits.
The sequester includes $11 billion in cuts to Medicare.
Once again, beneficiaries will feel the impact of these cuts in an indirect fashion. The spending cuts in Medicare are not directed at beneficiaries, but instead the providers. The cuts would result in a two percent reduction in payments to providers. The problem is that less providers are likely to provide services under Medicare as their payments go down. Many patient in rural areas already struggle to find a Medicare provider, and that problem will likely grow worse under the sequester.
Some of the biggest impacts of the sequester will come in the area of education, where the federal government helps fund after school and special education programs. The Department of Education would face a nine percent budget cut totaling $4 billion in 2013 alone. Aid to local districts would be reduced, and one survey showed that 80 percent of school districts would not be able to make up for this loss of aid with new, local revenue. As a result, services, staff, and/or teachers would have to be cut. The cuts would also severely impact the aid given for special needs students, resulting in a loss 7.200 teachers, aides, and other staff that are currently paid for by the federal government. Head Start, a preschool program for low-income children, and many before and after school programs would face significant cuts.
Working moms who currently rely on these programs may be forced to pay for daycare services instead. Local schools that rely on federal funding for special education will simply cut staff, which could impact every classroom as the remaining teachers are overwhelmed with larger classes that include both special needs and non-special needs students.
The FAA and Air Travel
One study concluded that the sequester cuts will result in the closure of 246 airport control towers, 1,500 air traffic controllers, 9,000 security screeners, and 1,600 customs officials. In addition, the cuts would result in a 10-year delay of Next Generation Air Traffic Control system which was projected to provide $281 billion in net benefits, save 27 million hours in flight delays, and reduce 216 metric tons of emissions. Taken together, the cuts will likely result in more delays and cancellations for travelers, and the cuts to screeners and customs officials represent a very real security concern. The delays in cargo shipments will likely increase the price of goods for the average American over time.
Food Safety and Drugs
The sequester will cut $318 million from the Food and Drug Administration budget which will “result in the loss of critical personnel” according to FDA commissioner Margaret Hamburg. The cuts would result in delays of the approval of new drugs and technologies to treat illness. The Department of Agriculture would face million in cuts which could result in a 15-day furlough at the Food Safety and Inspection service, which could effectively shut down the country’s meat processing. Overall, the FDA would have to conduct 2,100 fewer inspections of domestic and foreign food facilities, putting Americans at much greater risk of food contamination.
Border Patrol and the FBI
Finally, the sequester would also hit the Department of Homeland Security, forcing the agency to reduce work hours by the equivalent of 5,000 Border Patrol agents, a one-quarter reduction. The loss of border patrol agents could increase the rate of illegal immigration which greatly impacts Americans living along the border.
The FBI budget would be cut by at least $650 million, which would translate into a 25 workday furlough across the bureau. Those cuts could result in delays of criminal and gun background checks, not to mention the increased security risk for every American.