What to Expect When You're Sequestering: A Guide to the Next Steps
Obama and Congress couldn't reach a deal to avert $85 billion in automatic spending cuts. Here's what that means.
It's really going to happen.
When President Obama kicked off his press conference late Friday morning by saying, "The good news is the American people are strong and they're resilient," you knew he was grasping at straws. The upshot is that some time Friday -- legally, it must happen by 11:59 p.m. -- Obama must sign an order putting automatic spending cuts into effect. How little chance is there for a deal? Well, the political Twittersphere is currently absorbed with this bizarre, disturbing story instead of even bothering to talk about it.
Here are all the questions you need answered about what happens next.
Weren't there Senate votes yesterday? And some sort of meeting today at the White House?
There were, and they all failed. Here's what happened. First, the Senate voted on a GOP plan that would have kept the first round of cuts, worth $85 billion, in place, but given Obama discretion on how to implement them, rather than using the across-the-board, blunt-object approach mandated by the original legislation. There were political risks and upsides to it: On the one hand, it would have meant cuts that were less "dumb," and the GOP could have attacked Obama's choice of cuts. On the other, it would have been an abdication of responsibility to the president, plus defense hawks feared Obama would mostly use it to cut Pentagon funding. In any case, it was defeated 38-62.
A Democratic bill that would have cut spending by $55 billion in defense and agricultural subsidies and raised $55 billion through tax increases garnered a majority but -- welcome to the new normal! -- didn't get the 60 votes needed to proceed. The White House meeting Friday morning also failed. House Speaker John Boehner won't agree to any package that increases revenue, and Obama won't agree to any package that doesn't include revenue.
So does the world end tomorrow?
No.
Oh. Then why are we worried?
To be sure, bad stuff will start happening, just gradually. The cuts come half from the defense budget and half from a mix of mandatory programs like Social Security and Medicaid or discretionary funding. A few programs, like Medicare, are exempt. (Here's a 300-word explanation of which cuts go where; here's an exhaustive one.) There are two problems with this. One, specific things are going to be bad for specific people: The administration says as many as 750,000 jobs could be lost. Federal workers will be furloughed, which could affect any number of services -- though the most commonly mentioned ones are the prospect of longer airport security lines or reduced air-traffic control coverage. Of course, we'll really have to wait and see. Fiscal conservatives have accused the White House of fear-mongering in their description of how the cuts might affect individual Americans.
But economists agree about what the cuts will do in aggregate. They expect that spending reductions will harm the economic recovery, slowing growth by an estimated half of a percentage point in 2013.
Here's a chart of how some major programs will be cut, although it's not comprehensive:
And there's nothing we can do about this?
Theoretically, both sides could still reach a deal at any point and forestall whatever cuts haven't yet taken effect. But there's not much optimism about that right now. As demonstrated already, both sides have drawn lines in the sand that they swear they won't cross. Keep in mind, it's not a question of how many revenue cuts vs. how many spending cuts either side has to swallow; Republicans have ruled out any revenue cuts at all. As a result, it will take serious incentives -- either catastrophic repercussions of cuts, or else tremendous political pressure -- for one or both sides to give in. Polls already show Republicans losing on this issue, but some GOP lawmakers refuse on principle to raise more revenue. Others face tremendous pressure from interest groups or potential primary voters. They're hoping the politics change to favor them over time.
What if I'm a federal employee?
If you're going to be furloughed, you'll receive a notice. Those notices started going out Friday. But agencies are being cagey about when exactly the impact will come.
What if I'm not a federal employee?
If you're a contractor, you may still be seriously affected. And if you live in states that rely heavily on federal funding, your local economy make take a hit. Via Wonkblog, here's a chart from Pew of the five states that will be most and least affected. (Pew has more data here.)
My colleague Matt O'Brien has more details on the states that will be worst hit by military cuts. Hawaii, Alaska, D.C., Virginia, and Maryland lead the list.
Beyond that, there will be the reductions described above, which all citizens may encounter. The White House released detailed estimates of how the sequester will affect every state, which the Washington Post put in an excellent interactive form here.
I'm trying to look on the bright side. If Obama and Congress can reach a deal, we'll be in the clear, right?
Your optimism is impressive but futile. As Molly Ball predicted way back in early January, these crises will continue to define Obama's term. Later this month, Congress has to pass a continuing resolution to keep the government funded. If they don't, the government shuts down. And there's a pretty good chance that will happen -- at the very least, the negotiation is likely to go down to the wire. And then in May, the nation's likely to hit the debt ceiling again, which will probably result in frantic eleventh-hour negotiations.
Can't you give me anything to be happy about?
It's only one month until Opening Day, for what it's worth.