Dan Pfeiffer at the White House blog:
With less than three weeks before devastating, across the board cuts – the so-called “sequester” – are slated to hit, affecting our national security, job creation and economic growth, we must make sure we are having a debate over how to deal with these looming deadlines that is based on facts- not myths being spread by some Congressional Republicans who would rather see these cuts hit than ask the wealthiest and big corporations to pay a little bit more.
So we’re looking at “devastating” cuts, eh? I’ve also heard them called “cataclysmic” and “draconian.
Here’s the straight skinny:
Control Act (BCA) requires a cut of over $1 trillion in spending through a sequester. The Office of Management and Budget (OMB) is given authority to carry out the sequester. We do not yet know OMB’s interpretation of the Act, but the Congressional Budget Office (CBO) assumes that the sequester is intended to makecuts to discretionary appropriations and mandatory spending that add up to $1.2 trillion (less assumed debt service savings) over nine years, beginning in 2013.
Real level of program cuts is $984 billion. This is because $216 billion of the $1.2 trillion will come from assumed interest savings.
• Cuts are evenly divided between each of the nine sequester years. Therefore,each year, OMB must sequester $109 billion from projected spending.
• Annual cuts are split evenly between the non-‐exempt portions of defense(function 050) and non-defense spending – an approximate cut of $55 billion to each. Cuts are spread among discretionary and non-exempt mandatory spending. Defense and non-defense discretionary spending will be cut to lowest levels as a percentage of the economy in the modern era.
• Most mandatory spending is exempt from the sequester, including: Social Security, retirement programs, veteran’s benefits, refundable tax credits, Medicaid, the Children’s Health Insurance Program (CHIP), unemployment insurance, food stamps (SNAP), Temporary Assistance for Needy Families (TANF), and a host of other programs (mostly those benefitting individuals with low incomes).
$109 billion a year in cuts? ZOMG! That’s like losing 200 Solyndras or 2 Sandy aid bills!
Actually, since the federal government spends approximately $3.6 TRILLION dollars a year, $109 billion is like 3% of the federal budget (according to my feeble math skills.) As a matter of fact, it’s less than 10% of the annual deficit.
IOW – if the sequester does kick in, we’ll just be going into debt a little slower.