Why You Should Care About the Term ‘Sequestration’

First things first, the term “sequestration” has nothing to do with horses or the sport of horse riding. That would be “Equestrian.” Second, if you do not know what the term means, you should read this entire article as it may have a major impact on you, your family, and your financial outlook in the very near future. The White House and Congress are at yet another stand-off about policy and, with a looming sequestration deadline this week, sweeping military and domestic funding cuts could be devastating for the American economy. Interested now?

How Did We Get Here…Again?

Well, simply, Congress continues to fail at reaching a consensus as to how to govern effectively. In 2011, Congressional Republicans fought with President Obama on a compromise on the debt ceiling debate. And, in an effort to move them toward a handy solution, the President offered “sequestration” – sweeping cuts to the military and domestic spending – to incentivize their action on the debt ceiling. Well, sadly, the special committee chosen to handle the issue failed miserably. Not only that, Republicans deemed the sweeping cuts the “Obama budget cuts” as a talking point, signalling that they would no longer take control of the looming crisis.

In essence, these periodic economic scares are 100% self-imposed by Congress. And, we continue to arrive at these impasses as a direct result of their incompetence. But, will it really happen this time?

Will the Cuts Really Happen?

Many economists agree that the sequester is likely to occur. To them, it seems to be a foregone conclusion. Why? Well, with the previous battles over simple congressional duties like passing a budget, increasing the debt limit, or passing policy to avoid the fiscal cliff, it has become apparent that our “do-nothing” Congress is actually great at consistently failing the American people. And, there have been no indications that this time will be any different.

And, while a majority of Americans want to stave off the sweeping cuts, it is clear that many in the voting public do not quite grasp the current state of the US deficit. For example, a majority of those polled recently indicated that the deficit was increasing when, in actuality, the 2013 budget is projected at “$845 billion, down from last year’s $1.1 trillion.”

Similarly, it is clear that a lack of understanding about the current status of the economy might be the key obstacle shielding Congress from the negative attention it rightfully deserves. And, Congressional Republicans are likely the greatest candidates for disdain in this case.

But, maybe the public’s inability to personalize this crisis has also enabled the issue to thrive for so long. But, just this week, the White House released reports detailing how this ominous sequestration issue could turn into a major pocketbook issue, personalizing it for each every personn living in this country.

What Could This Mean for You?

The President is still working with Republicans on an alternative to the sequester. But, for now there are several finite impacts the current sequestration bill could have on the American public. The $85 billion cuts – $1.2 trillion by 2021 – could  impact local, state, and Federal economies for quite some time.

According to the Washington Post, the White House has listed the following impacts – along with many others – as very likely to occur if no changes are made in Congress by Friday, March 1st.

  1. Public schools across the country could face millions of dollars in losses including reduced staff and lower rates of students served.
  2. Thousands of children could lose access to child care programs on which they depend.
  3. There could be millions of dollars in cuts to the “STOP Violence Against Women Program” reducing the number of victims served and the cash available to assist current program participants.
  4. The sequester could slow the recovery efforts in New Jersey from Superstorm Sandy.
  5. There could be cuts to the National Institutes of Health, the National Science Foundation, and Clean Air and Clean Water programs.
  6. The Small Business Association could face cuts to its business loan programs.
  7. Public health initiatives like HIV testing, substance abuse programs, and access to public health threat programs could face drastic cuts leaving many without quality resources to ensure their personal health.

So, overall, this is not a positive story to tell. But, knowing this information is half the battle. If Congress does nothing, Americans could not only suffer in the immediate future, there could be lasting educational, health, and economic consequences felt for generations to come.

Urge your officials to act before it is too late. And check out the impacts to your state to prepare youself for what seems to be the inevitable.


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