Your Sequester Day guide to what it means for Tennessee

Friday, March 1, 2013 at 10:07am

Barring some last-minute evasive action by Congress, sequestration — commonly known as “the sequester” — will take effect by midnight tonight. Feeling out of the loop? Here’s a breakdown of what’s going on.

OK, first things first. Are we calling it “sequestration” or “the sequester”?
“Sequester” is a verb, making “the sequester” a grammatically incorrect nonsense term. So we’re calling it sequestration. If you’re more comfortable appealing to a higher power, the arbiters of our professional parlance at the Associated Press Stylebook have ruled on the matter — they prefer “automatic budget cuts taking place March 1.”

What is sequestration?
Sequestration is $85 billion of automatic cuts to federal spending that, by law, President Barack Obama must order by midnight tonight, without some eleventh-hour maneuvering by Congress.

Huh. Where did this come from? Why is this happening?
Well, back in 2011, the federal government was about to hit the debt limit, raising the specter of the United States defaulting on its loans. Congressional Democrats, and the president, wanted to raise the debt limit (as has been done routinely in the past). Republicans didn’t want to raise the debt limit unless they got spending cuts in return. The resulting compromise was the Budget Control Act of 2011. (Only three members of Tennessee’s congressional delegation voted against the compromise: Republicans Chuck Fleischmann, and Scott DesJarlais, and Democrat Steve Cohen.

The BCA raised the debt ceiling $2.1 trillion, and placed caps on discretionary spending. It also created the so-called supercommittee, which was tasked with coming up with $1.5 trillion in cuts over 10 years. The sequestration was meant to scare the committee into making such a deal, by including spending cuts that neither Republicans (defense spending) nor Democrats (entitlement spending) would want to see take place. The sequestration would only take place, however, if the committee failed. They failed.

OK, this is starting to sound familiar. I was at a New Year’s Eve party, but someone mentioned something about a cliff?
Yes, sequestration was originally scheduled to take place on January 1, as part of the so-called fiscal cliff (spending cuts, tax hikes, and more, all at once). But Congress struck a last minute deal — The American Taxpayer Relief Act — that delayed sequestration by two months, and reduced it by $24 billion. It also included higher taxes for upper income levels — individuals making over $400,000 per year — but did not significantly address spending, leaving that part of the equation for later (now).

So, what will be cut when sequestration goes down?
From the latest Congressional Budget Office report:

— $42.7 billion (7.9 percent) in cuts to defense spending
— $28.7 billion (5.3 percent) in cuts to non-defense (domestic) discretionary spending
— $9.9 billion (2 percent) in cuts to Medicare spending
— $4 billion in cuts to other mandatory spending (including a 7.8 percent cut in mandatory defense spending, and a 5.8 percent cut to non-defense mandatory spending).

That’s $85.4 billion in cuts this year. Sequestration will amount to a total of $1 trillion in cuts to federal spending over 10 years, if it stays in effect.

If I’m being honest, I only care about what’s going to happen in Tennessee. Give it to me local.

Tennessee has a moderate risk of exposure to federal spending cuts, according to a recent study from the Pew Center on the States and the Wells Fargo Economics Group. Sequestration will hit hardest in states where federal spending is a higher percentage of the state’s GDP. In Tennessee, federal spending accounts for 4.9 percent of the state’s GDP — putting us somewhere in the middle. Our neighbors in Kentucky and Alabama have a higher risk with 9.9 percent and 8.9 percent ratios respectively. At the high end of the spectrum are states like Virginia and Maryland, where the ratio is 19.7 percent.

The White House — not a disinterested party in all of this, to be sure — released a state-by-state breakdown of how it says sequestration will affect every state. They list 12 areas that will be affected — read the whole thing here — but here’s a sample:

Teachers and schools: “Tennessee will lose approximately $14.8 million in funding for primary and secondary education, putting around 200 teacher and aide jobs at risk. In addition about 32,000 fewer students would be served and approximately 60 fewer schools would receive funding. In addition, Tennessee will lose approximately $11.7 million in funds for about 140 teachers, aides, and staff who help children with disabilities.”

Military readiness: “In Tennessee, approximately 7,000 civilian Department of Defense employees would be furloughed, reducing gross pay by around $36.9 million in total. Army: Base operation funding would be cut by about $1.9 million in Tennessee.”

Funding for clean air and water: “Tennessee would lose about $2,211,000 in environmental funding to ensure clean water and air quality, as well as prevent pollution from pesticides and hazardous waste. In addition, Tennessee could lose another $1,216,000 in grants for fish and wildlife protection.”

Can anything be done to stop this?
Yes. Congress could pass a bill replacing sequestration with some other deficit reduction package. They could pass a bill simply cancelling sequestration. These options have been tried, but have failed to receive enough support.

Will anything be done to stop this?
It’s not looking that way. The House and the Senate have gone home for the weekend. On the other hand, congressional leaders from both parties are meeting with the president this morning at the White House. But Senate Minority leader Mitch McConnell (R-KY) said in a statement this morning “there will be no last-minute, back-room deal and absolutely no agreement to increase taxes.” So we’re going with “no.”

If they were going to do anything about it, what would they do?
Depends on who you ask. Generally speaking, Republicans would like to see sequestration replaced with something that does not raise taxes, and does not cut defense spending, but more or less does all the rest. They have offered plans to this effect. Democrats favor a mix of tax increases and spending cuts, spread out over the next 10 years. They have offered plans to this effect.

Republicans can often be heard saying, “We have a spending problem, not a revenue problem.” They believe the federal government should be smaller, and spend less. So, with the exception of the cuts to defense spending, many of them don’t mind sequestration at all. They have argued that the $85 billion in cuts won’t really be that bad, seeing as it accounts for less than 3 percent of the federal budget.

The White House, and Democrats, of course, argue that you will feel it, and you won’t like it (see the White House’s list above). While they have conceded that spending must be cut, they have said cuts must be balanced with additional increases in revenue (taxes) to reduce the deficit.

What do the members of Tennessee’s congressional delegation think about all this?
Here are snippets from some of their statements on sequestration:

Rep. Phil Roe (R), during a recent C-SPAN appearance on Feb. 27: “The cuts I want to see happen, but not this way.”

Rep. John Duncan (R), in a speech on the floor of the House Feb. 26: “The scare tactics about the sequester seem to grow more ridiculous—more exaggerated—every day...”

“...Our national debt is now at a mind-blowing $16.5 trillion. It will go to over $25 trillion in the next 10 years under optimistic scenarios. The Congressional Budget Office a few days ago put out a report that said interest on our national debt, just the interest, was going to go from $224 billion this fiscal year to an astounding $857 billion in 10 years. If we allow that to happen Mr. Speaker, we will then not be able to pay for anything other than Social Security, Medicare, Medicaid, and interest on the debt. The sequester we are talking about now is miniscule when compared to our present debt and our future pension liabilities. Our choice is simple. We can cut now, or crash in the very near future.”

Rep. Chuck Fleischmann (R), in a statement to the Knoxville News-Sentinel Feb. 14: "Sequestration has been a bad plan from the beginning. That's why I voted against it and have since voted in favor of both House plans that would replace sequestration with responsible cuts. We must prioritize spending, and the work done in Oak Ridge is of utmost importance to our nation's economy and security."

Rep. Scott DesJarlais (R), in a statement to Nooga.com Feb. 26:
"The White House has once again resorted to disingenuous scare tactics in order to avoid making any sort of meaningful spending cuts," DesJarlais said in an emailed statement. "The president's dishonest approach is emblematic of his administration's inability to put sound policy over partisan politics. There are numerous areas of waste, fraud and abuse that exist within the federal agencies that could easily be eliminated before essential services are cut. If the president needs help in identifying these common sense spending reductions, I am happy to walk him through the budget line by line."

Rep. Jim Cooper (D), from a sequestration explainer on his website: “Sequestration was never supposed to happen. The Super Committee could not agree to the bare minimum of cuts that the BCA required. The Super Committee failed America. The sequester was only setup to force action, not as good fiscal policy. But now because of political games it may actually go into effect.”

“...the sequester is like a lawnmower that cuts both your grass and your garden. We need thoughtful spending cuts. These are ugly, indiscriminate cuts that no one wants.”

Rep. Diane Black (R), in a statement released Feb. 28: “As even the president will admit, his sequester is the wrong way to reduce the deficit. The difference is: the House Republicans have offered an alternative, where as the president has not...”

“...While the sequester is certainly problematic, a failure to cut any spending at all by delaying or eliminating these cuts would be far worse for the fiscal stability of our nation. America is fast approaching a debt crisis, unless action is taken to reverse course. Ultimately, in order to revive our struggling economy, expand opportunity and prosperity, and ensure America maintains its leading role in the world, it is imperative that Washington stops spending money we do not have by cutting wasteful spending, ridding out fraud and abuse and reforming our broken entitlement programs.”

Rep. Marsha Blackburn (R), to The City Paper Feb. 21: “We are incredibly concerned about what these cuts would mean to Fort Campbell, and the impact it would have there. Fort Campbell, as you know, has a large civilian military presence and we know that in Tennessee as a whole statewide, you would see about 7,200 civilian employees impacted by this and it would have a payroll significant in our state, and would reduce payroll into our state by about $35 million a year...”

“...Our constituents want to see federal spending cut. They know that Washington does not have a revenue problem, it has a spending and priority problem. And if you’re out and about with me, what you will hear from my constituents is that they want Washington to reduce what the federal government is spending. They think that’s an imperative. And if you talk to economists, who are looking at our bond rating, they’re going to tell you the same thing. That our out of control spending has got to be reined in, and it’s got to be reduced. Now, it can be done in a targeted manner or it can be done in the across-the-board manner. The across-the-board manner is the way it is going to happen for this first tranche of spending cuts. My hope is that you’re going to see us come back, and do some more targeted cuts.”

Rep. Stephen Fincher (R), in a statement released Feb. 28: “With a $16 trillion national debt impeding our economy from reaching its full growth potential, there’s no doubt we need to cut our out-of-control spending. But the President’s sequester is not the way to address our spending problem. I have voted not once, but twice to replace sequestration, offering smarter, targeted cuts, but the Senate declined to bring the legislation up for a vote. Now, rather than offering real spending cuts and budget reform, the President claims those who create jobs aren’t paying Washington enough and wants to raise taxes — again.”

“With the sequester deadline just hours away, the President is still insisting on raising taxes that only stalls a struggling economy. Instead of talking about unnecessary tax hikes, sequestration can be avoided through responsible cuts to wasteful spending. In all, the sequestration equates to three cents of every dollar of Washington spending. Programs like the President’s $2.2 billion free cell-phone program and NASA’s near $1 million in annual spending on a so-called “Mars menu” to test space food should be on the chopping block. Clearly, our President needs to get his priorities straight.”

Rep. Steve Cohen (D), during a speech on the House floor Feb. 14: “It’s health that I’m worried about, and it’s also jobs. Major drivers of jobs is research and development, and education, and infrastructure spending by the federal government. And most of our great advances, whether it’s railroads, or the Internet, or health care, have come through federal government partnerships with the private sector. We need to continue those to create a middle class of consumers that can grow our economy out of these problems. It’s not just President Obama who says it. It’s what I call the three wise men — Krugman, Stiglitz, and Robert Reich. Austerity hasn’t worked. We need to invest in America and grow our economy

Sen. Lamar Alexander (R), in a conference call March 1, reported by Nooga.com: "If this sequester goes into effect, it will be a complete failure of presidential leadership and ought to be an embarrassment to the president," said Sen. Lamar Alexander, in a conference call with Tennessee reporters. "… Everyone has known for 18 months that it needed to be replaced."

Sen. Bob Corker (R), in an interview with WBIR 10News in Knoxville: "It's a ham-handed approach. We should be far more thoughtful than we are about how we do things," said Corker. "We're better off letting the sequester happen, than kick the can down the road, than not dealing with the budgetary issues that we have as a nation."

8 Comments on this post:

By: Jughead on 3/1/13 at 2:24

I don't care HOW it happens, ANY cut in spending by these Washington azzhats is a step in the right direction.

By: Rasputin72 on 3/1/13 at 2:42

Life is tough! The 750,000 who will lose their jobs may or not be the ones who should lose their jobs but something has to be done to stop the spending in Washington.

I would start with the Green Hills post office.

By: bb37221 on 3/1/13 at 10:36

billbanksblog.blogspot.com This is just another example of how wrong-headed Republicans are when it comes to teh economy. Virtually every economist in the world knows that the primary cause of the deficit is not spending but a shortfall in revenue. Revenue has fallen from 19.5% of GDP to less than 15% of GDP. One of the causes of this decline in revenue is all of teh tax expenditures in teh form of loopholes, exemptions, exclusikons, and other special considerations. Close all of these and the budget will be balanced without an increase in today's tax rates. The other reaason for revenue decline, as opposed to spending is the continued lack of jobs. While there has been job growth over the past five years, that growth is not sufficient to offset the losses resulting from the recession. One reason for this failure is this is the first recession in modern history where Congress has not acted to increase public sector jobs. Every previous recession was ended, in part, by an increase in public sector jobs to offset the loss of private sector jobs, but Congress in its infinite wisdom to make Obama a one term President failed to act to create jobs. For those who maintain that government cannot vreate jobs, please explain how sequestration will result in job losses numbering close to one million. Also, for those naysayers, please explain why the Army is forced to purchase 3000 unwanted tanks, when there are already 2000 unused tanks rusting in the Nevada desert, because to cancel the contract to continue to build inwanted and un needed tanks where there are not the necessary crews to man or ooperate those tanks will result in the loss of jobs in key congressional districts. The country is in today's mess because Republicans are economic imbeciles. If you don't believe me, read the comments above.

By: Rasputin72 on 3/2/13 at 10:46

The country is in a mess because of the soaring birthrate of the underclass. This coupled with our governments insistence that the productive class pay for their existence and the crimes they leave behind.

By: Rocket99 on 3/4/13 at 9:34

Rasputin, if the last comment was not a sarcastic one, you truly are an idiot.

By: tomintn on 3/4/13 at 9:40

I, too, am glad to see something happen!

There has been minor spending cuts in the recent past, but nothing major. Actually this is not major. A TV discussion reported this is 0.6% of the total budget.

We went through this during the Clinton administration. Nothing happened. The average person will see no difference, if this is handled appropriately. If the Pres wants to make it political, he can lay-off all air traffic controllers, and other vital personnel. It will be interesting to watch.

My wife and I learned in the 1980's you cannot spend your way out of debt. You must cut back, pay off all bills every month.

We worked 2 primary jobs, and 3 second jobs. We paid the house off 8 years early.

Washington is poisoned with lifelong spenders; at our expense.

By: pepawjoe on 3/4/13 at 10:17

Bottom line here. Obama and his GROUPEES say "MY WAY OR THE HIWAY" attitudes.
Both Parties, Sorry Alexander and Croker in our Senate, and Cooper in the House. It's been known several months now, and this Tennessean "HASN"T HEARD A WORD FROM YOU"!
As I recall, "EACH OF YOU" were elected to "REPRESENT THE PEOPLE". Where have YOU ALL been at during the past several months. YOU KNEW TOO ?
This seems to be a Nationwide Problem for Americans. "NO-ONE" wants to represent the People or Country anymore. This "NEW" type Government Action is "AIMED TO PLEASE ONE-ANOTHER'S GAINS, AND GOVERNMENT'S BENEFIT, "INSTEAD OF THE COUNT^RY AND PEOPLE" ! "PERSONAL GAINS HAVE REPLACED REPRESENTATION". PERIOD !
This Government decided to cut Military Spending, Lay PEOPLE OFF, Cut People Jobs, Teachers, Policeman, Medical Personnel, etc.
"WHERE"S THE ELECTED INDIVIDUALS CUTS AT"?? "SPECIAL TREATMENTS PREVENTS CUTS, ie EXEMPTIONS".
NO RESULTS = NO PAY . That's how America is working and paying their workers. Why not the Government TOO ?

By: think on 3/4/13 at 10:46

I think people need to understand a few key ideas here:
- A job that does not add value to society is a waste of money and actually hurts the economy. There are limited resources. The economic benefit from you being paid for doing nothing and buying stuff you don't need is not enough to make up for the contributing members of society not able to get funding/jobs. Every government job that does nothing results in a productive private sector job that will never exist.
- The government is very big. There is no way taking out 2-3% of the federal budget is going to cripple anything. Just like businesses that were forced to downsize during the recession, everyone else just has to do a little bit more to cover the missing people. Maybe the government will be forced to think about efficiency for once. Start automating stuff.

These spending cuts are a nice gesture, but that is all they are. Until you address entitlement reform and the hundreds of trillions of dollars of unfunded liabilities in the future, this is all for naught.