Economic Justice Obama Rocky Anderson

The Sharp Pain of Sequestration

Despite some pundits making light of the immediate effects of sequestration, the pain will soon be very real to our nation’s most vulnerable. Sharon Parrott, for the Center on Budget and Policy Priorities, a nonprofit research group laid it out in stark terms:

“In fact, sequestration will have a real impact on Americans across the country.  There is no way to cut $85 billion in a single year, mainly from discretionary programs — which include most defense spending as well as medical research, education, help for low-income families, food and water safety, law enforcement, and so on — and not see real impacts.  That’s especially true because sequestration would come on top of the large cuts in discretionary funding that are already in place under the 2011 Budget Control Act (BCA).  Taken together, the BCA cuts and sequestration would cut discretionary spending 14 percent below the 2010 level in inflation-adjusted terms…” (http://www.cbpp.org/)

Here are examples of what will start to happen under sequestration:

  • Housing programs will be hit particularly hard, with about 125,000 individuals and families put at risk of becoming homeless, the Department of Housing and Urban Development estimated. An additional 100,000 formerly homeless people might be removed from emergency shelters or other housing arrangements because of the cuts, the agency said.
  • In our state, the King County Housing Authority stopped issuing new housing vouchers on March 1, 2013. “Sequestration will result in some 600 fewer families in our local communities receiving crucial rental assistance over the next year,” Stephen Norman, the Executive Director of the county housing authority, said in a statement. “Because rents are so high, many of these families may, quite literally, find themselves out on the street.”
  • The roughly 3.8 million long-term unemployed workers receiving federally funded unemployment benefits will face a nearly 11 percent cut in their weekly benefits.  That will translate into a cut of roughly $130 per month for jobless workers.
  • The WIC nutrition program for low-income pregnant women, infants, and young children will have to turn away an estimated 600,000 to 775,000 women and children, including very young children, by the end of this fiscal year.
  • Cuts to programs that aid children with special needs
  • Cuts to Job-training programs that help unemployed people find a new career
  • Cuts to foreclosure prevention services
  • Cuts to programs that help 150,000 veterans every year make the transition into the non-military work force.
  • Cuts in the Social Security Administration would lead to staff reductions (or furloughs) that would create delays in helping people apply for benefits or resolving problems that arise with their benefits.
  • Cuts in the Transportation Security Agency would mean staff cuts or furloughs of airport security workers, leading to longer lines at airports and slower travel.

Economy-wide, Congressional Budget Office Director Douglas Elmendorf told Congress this week that sequestration would cut GDP growth this year by 0.6 percentage points (from 2.0 percent to 1.4 percent) and cost about 750,000 jobs by the fourth quarter of 2013.

How did we get here?

The Budget Control Act (BCA) of 2011 came into existence when congressional Republicans refused to undertake the pro forma increase in the nation’s statutory debt ceiling. Instead, they held the debt ceiling increase hostage to deep spending cuts. Ironically, this “will translate into higher debt ratios than would have existed before the cuts. In short, such cuts are even fiscally, not just economically, counterproductive.” Counterpunch 3/1/13 Andrew Fieldhouse

During the debt ceiling negotiations in the summer of 2011, the Obama administration acquiesced to the GOP’s demand that every dollar increase in the debt ceiling be matched dollar-for-dollar with spending cuts.

The BCA had two phases:

First, discretionary spending cuts and caps, carried out by a $900 billion increase in the statutory debt ceiling (equal to policy savings plus reduced debt service).

Second, the default for the remaining $1.2 trillion increase in the debt ceiling was $984 billion in automatic sequestration cuts (or $1.2 trillion in savings with interest).

By demanding austerity that was entirely comprised of spending cuts, the BCA maximized the economic harm posed by sequestration per year (a dollar of government spending cuts currently inflicts four-to-seven times the damage of a dollar of revenue).

Democrats to the Rescue?  Sorry, not today

As long ago as last December, Dick Durbin of Illinois, the second-ranking Senate Democrat, said he might reluctantly be open to expanding means- testing for Medicare eligibility — charging more to higher- income seniors.  Another so-called liberal lion, New York Senator Chuck Schumer said he wouldn’t rule out changing entitlements, challenging Republicans to come up with specific proposals.

And as Democracy Now reported today,( 3/4/13): “In the aftermath of the deadline, Obama has again signaled his willingness to cut spending on so-called entitlements like Medicare and Social Security to appease Republican demands. On Sunday, White House senior economic official Gene Sperling said Obama already discussed entitlement reform with lawmakers from parties over the weekend.” He said that President Barack Obama is willing to work with lawmakers to cut entitlements such as Medicare and Social Security as long as tax reform remains part of the discussion.

“He’s reaching out to Democrats who understand we have to make serious progress on long-term entitlement reform and Republicans who realize that if we had that type of entitlement reform, they’d be willing to have tax reform that raises revenues to lower the deficit,” Sperling said on CNN’s “State of the Union.”

While the White House declined to comment on specifics, the White House’s website includes $25 billion in cuts from “Medicaid, Pay-for-Delay, IPAB and program integrity.”

If you’re waiting for Congressional liberals to save us, don’t hold your breath.  Congressmen Alan Grayson and Mark Takano circulated a letter in late February addressed to President Obama. It stated, in part, “we will vote against any and every cut to Medicare, Medicaid, or Social Security benefits — including raising the retirement age or cutting the cost of living adjustments that our constituents earned and need.” But the letter’s current list of signers includes just 16 members of the 70-member Progressive Caucus.

As Norman Solomon put it in a recent Counterpunch article, “Their absence from the letter is a clear message to the Obama White House, which has repeatedly declared its desire to cut the Social Security cost of living adjustment as well as Medicare. In effect, those 54 non-signers are signaling: Mr. President, we call ourselves “progressive” but we are unwilling to stick our necks out by challenging you in defense of Social Security, Medicare and Medicaid; we want some wiggle room that you can exploit.”

As the budget battles rage on in Washington, sources said Obama plans to nominate on Monday Sylvia Mathews Burwell to head the White House Office of Management and Budget. A veteran of the Bill Clinton White House, Burwell is president of the Walmart Foundation, which handles the corporation’s charitable efforts.  Yup, now there’s a corporation that understands what it means for poor people to take cuts!

This is what you get when the system revolves around the dominance of the current two-party system.  Democrats and Republicans both agree on pain for working people.  The only question is how much.  Both are pro-austerity parties, the same system that has wrecked several countries in Europe.  It will be coming here, and we need to fight it head on, starting at the local level and moving up to Congress and the President.

Originally published at http://www.justiceparty-wa.org/2013/03/10/the-sharp-pain-of-sequestration/

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