How Does the Sequester Affect Me?
By Valentin Schmid On February 27, 2013 @ 12:07 pm In National News | 1 Comment
If Congress doesn’t act until March 1, $85 billion in automatic budget cuts will limit a host of Federal programs and services. Read here whether you are going to be affected by budget cuts in defense, education, and Medicare.
If you are one of the 2.2 million Federal government workers, you are sure to be affected if the planned cuts go ahead. The Congressional Budget Office (CBO) expects about 800,000 “full-time equivalent” employment cuts through 2014.
This does not mean, however, that there will be as many lay-offs. The most likely route to decrease wage costs will be forced unpaid leave, also called furlough.
An analysis by Bank of America shows that reducing the workweek of 1.8 million government employees by one day per week would save $11 billion until September 30 and be equal to 400,000 job cuts.
The Department of Defense has already indicated that it will put 800,000 of its civilian employees on a four-day work week starting in late April. The furloughs require a 30-day notice, which is why they cannot be started as soon as the sequester hits and will most likely be phased in gradually.
If you are one of 8 million government contract workers, it is highly likely that you will see reduced demand for your services in the future.
Needless to say, a reduced amount of government workers also means that services to citizens will be delayed or cancelled. This will affect all government services as pay for federal government employees is subject to the Sequester. The IRS for example has already said the processing of tax forms will be delayed.
Apart from reduced manpower, these are the most important areas affected by direct cuts according to the Bipartisan Policy Center:
• Disaster Relief (including hurricane Sandy) -- $2.7 billion
• Section B Rental Assistance -- $1.3 billion
• Air Transportation Security and Traffic Control -- $800 million
• Primary and Secondary Education -- $700 million
• Mental Health Services -- $200 million
In the case of disaster relief, $2.7 billion less money will be available to pay out to victims. Primary and secondary education will need to save $700 million, which it cannot spend on school equipment. Medicare payments to providers and plans will also be reduced by 2 percent, but beneficiaries will not face direct cuts.
Many programs, however, are exempt from the automatic cuts:
• Mandatory defense spending
• Pay of military personnel
• Veteran benefits
• Social Security
• Retirement Programs
• Unemployment insurance
• Food stamps
• Other programs that benefit individuals and families with low income
Despite the headline figure of $85 billion in reduced budgets, actual decreases in spending will likely only total $42 billion until September 30, according to the Congressional Budget Office. Past budgets can be used to cushion against 2013 effects, the CBO says.
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