About $110 billion in cuts kick in Jan. 2, hitting defense and domestic programs equally hard unless Congress figures out a way to avoid the reductions. Some key questions and answers about the sequester:
Q: What is sequester?
A: Automatic cuts that are imposed across the board to federal programs, from the Pentagon budget for buying guns, ships and planes to the National Weather Service’s equipment for forecasting hurricanes, tornadoes and other severe weather. It’s part of the drive to cut the deficit.
Q: How deep are the cuts?
A: The reductions total $1.2 trillion over 10 years. The first-year cuts are $110 billion, split evenly from defense and domestic programs, from a budget of $3.8 trillion. Many programs, however, would be exempt from the cuts.
Q: What programs would be spared?
A: Social Security, Medicaid, supplemental security income, refundable tax credits, the children’s health insurance program, the food stamp program and veterans’ benefits. The White House said last week that President Obama would exempt military personnel from the cuts.
Q: What about Medicare?
A: The government-run health care program for seniors would face a 2 percent cut in Medicare payments to providers and insurance plans. That works out to a reduction of $11 billion next year.
Q: If sequester is so bad, why would anyone agree to it?
A: It was the default plan when all else failed. Last August, congressional Republicans demanded spending cuts in response to Obama’s plea to raise the nation’s borrowing authority by $2.1 trillion. As part of the negotiated deal, the two sides agreed on $900 billion in spending cuts and the creation of the Joint Select Committee on Deficit Reduction.
The committee was told to come up with $1.2 trillion more in deficit cuts – through additional spending cuts, revenue increases or a combination of both – over a decade. If the bipartisan supercommittee failed, or if Congress rejected the panel’s recommendation, the automatic spending cuts would start Jan. 2, 2013. The countdown to the sequester began last November when the supercommittee was unable to reach a consensus on a deficit-cutting plan.
Q: Who backed that deal on the sequester?
A: Plenty of members of Congress – Republicans and Democrats, committee chairmen, defense hawks, tea party freshmen. The House vote was 269-161, with 174 Republicans backing the Budget Control Act of 2011. Supporters included the chairman of the House Armed Services Committee, Rep. Howard “Buck” McKeon, R-Calif., and the head of the Appropriations Committee, Rep. Hal Rogers, R-Ky. The Senate vote was 74-26, with Senate Minority Leader Mitch McConnell, R-Ky., and Sen. John McCain of Arizona, the top Republican on the Armed Services Committee, supporting the legislation. Obama signed it into law.
Q: Is sequester part of the so-called fiscal cliff?
A: Yes. The cliff is the prospect of the Bush-era tax cuts expiring Jan. 1 and the automatic spending cuts occurring at the same time. Most economists fear that a combination of higher income taxes on virtually everyone and a simultaneous big drop in government spending would plunge a still fragile economy back into recession.