On March 1, federal sequestration is set to begin automatically if the U.S. Congress cannot reach an agreement on austerity measures.
The spending cuts would result in budget reductions of 5.3% for most domestic programs and more than 8% on defense spending. They would save the nation $1.3 trillion over 10 years.
During the Feb. 26 congressional hearing, Federal Reserve Chairman Ben Bernanke urged Congress to find an alternative. Not doing so, he said, would damage the economy.
“Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant,” the chairman explained.
Recent signs of recovery from the recession have been undermined by congressional stopgaps such as legislation that averts automatic budget cuts or raises the debt ceiling without fixing their underlying causes. Those actions, Bernanke said, have led to a growing sense of uncertainty about the economic health of the United States.
Instead, the chairman suggested, Congress should elect to make sweeping budget cuts all at once. That way, the government does not prolong uncertainty about the state of the nation’s economy.
As of Feb. 26, a deal of any kind does not seem likely.
House Speaker John Boehner told reporters, “We should not have to move a third bill (in the U.S. House of Representatives) before the Senate gets off their (butt) and begins to do something.”
The Republican-led House of Representatives passed two bills last year that would have dealt with sequestration with sweeping budget cuts alone, which the Democrat-led Senate contends is not enough.
They argue that a mixture of tax increases and budget cuts is the most responsible way to move forward.
As Boehner blames the Democrat-led Senate for the hold-up, President Barack Obama blames Republicans in Congress.
During a Feb. 26 speech on the matter, Obama said, “There are too many Republicans in Congress who refuse to compromise even an inch when it comes to closing tax loopholes and special interest tax rates.”
Sequestration was added to a 2011 bill that raised the debt ceiling as an incentive for Congress to reach an agreement on the deficit.
Since the cuts are spread over 10 years, Bernanke said their impacts are unlikely to be felt immediately, but many argue the far-reaching cuts will slow the national economy and defense cuts will make Americans less safe.
Originally published in Ellettsville Journal, 2013. Republished here for archival and portfolio purposes.