The sequester is here, folks, and with the House republicans and democrats still refusing to forgo their respective grudges, it looks like America’s economic future may be headed for yet another litter of painful setbacks.
Originally conceived with the intent of forcing bi-party talks for economic rehab, the plan proposes huge cuts to federal defense and discretionary spending.
The idea? To hit both parties where it hurts: i.e. major cuts to defense spending -a serious hit to Republicans – and similarly huge slashes to the domestic budget (healthcare, public schools, etc.) – major ouch for the Dems. The hope, crudely stated, was that both parties, seeking to avoid their respective casualties, would work together and settle on a deal to cut the deficit.
Unfortunately, neither side bit the bate. The cuts were set to hit in January. Fiscal-cliff talks however, managed to push budget slashes back until March 1st in the hopes that the parties would reach an agreement. They didn’t. House Republicans continue to dismiss the President’s bid for Congress to hype taxes on the rich, while Democrats continuously refuse to entertain prospects of reducing discretionary spending, for fear of it targets the middle class.
In short, Republicans still don’t want to raise taxes, and instead, are favoring cuts to social programs like Medicaid, and food stamps. Democrats, including the Mr. Prez himself, are pushing a two-pronged approach aimed simultaneously at both revenue increases and spending cuts.
Despite the White House’s (debatably hyperbolic) forecasts, the Sequester’s effects probably will not propel the US into total economic ruin. Its massive budget slashes however, aren’t set to do us any favors.
The result will be across-the-bored cuts that will, indeed, hit both sides where it hurts but will not, unfortunately, help anyone. Assuming the worst, the post-“Sequestered” economy will see 800,000 Pentagon workers hit with furloughs, thousands of teachers out of work, 2% reduction in Medicare funding, dangerous criminals on the streets, and less police officers to contain them. The reality is probably not as grim. But its certainly not good, and the result, though likely not as dire as the White House is currently boding, will probably see massive across-the-bored budget cuts, substantial job loss, and a certain, though maybe not so irreparable dip in the G.D.P.
While cuts are set to hit, just how hard is a query still up for debate, which pretty much means that the country’s economic fate remains dependent on the ability of congress’s heavily polarized players to reach a bargain. Translation: this could take a while.
The problem here is one of party politics more than policy, and with both sides stringently set on their respective dogmas, its hard to say whether a decision will be reached with enough time to avoid the economic storm at its worst.
So, what’s the forecast? At this point, a resolution doesn’t look promising. That said, considering the plan’s broad, and massive, cuts to defense and non-defense discretionary spending, we can be sure that neither side is too keen on the idea of the Sequester going down in full swing. In short, a deal is bound to happen; just when that occurs is simply a question of political chicken.