Unless you’ve had your head buried in the sand, you’ve likely heard the term “sequestration” bandied about over the past few months, with increasing urgency in recent weeks. If you check out the linked graph of Google search traffic for that word “sequestration” over the past 12 months you’ll see just what I mean.
So what exactly is sequestration and why are people going so crazy about it? Well, remember the fiscal cliff? That was only partly resolved back in January. Congress agreed on tax side of things but delayed action on the spending side for two months.
And guess what? It’s been (almost) two months.
As a reminder, the fiscal cliff was composed of two primary pieces. One was the expiration of the Bush era tax cuts. The other was $1.2 trillion in spending cuts over the next ten years. As you may recall, these spending cuts are a result of the failure of the Joint Select Committee on Debt Reduction to come to an agreement on deficit reduction during the fall of 2011.
This so-called “super committee” was formed as part of the debt ceiling negotiations in August of 2011. They were charged with coming up with a plant to reduce the deficit by $1.2 trillion over the next decade by November 2011 at the latest. But they didn’t.
The failure of the super committee to come to an agreement triggered automatic spending cuts (sequestrations) at the start of 2013. These spending cuts, which will average $110B per year, will fall evenly on domestic and defense spending.
The goal was to create a scenario that was unpalatable to both sides. Democrats would object to indiscriminate cuts to social programs and Republicans would object to indiscriminate cuts to defense spending, and so they would work together to find a more nuanced solution. But they didn’t.
And so here we are. January 1st came and went and Congress “solved” the problem by delaying sequestration by two months.
This week marks the end of two months and nothing (more or less) has happened. The good news is that Congress is actually heading back to Washington this week so perhaps they’ll actually get something done. But I’m not holding my breath.
What about you? Any predictions on the big showdown?