Federal cuts hit home

Minnesotans will soon feel the full force of the across-the-board federal cuts to critical services known as the sequester, according to a new report from the Center on American Progress. Many measures used to soften the blow of sequestration have been exhausted as we enter the 2014 federal fiscal year.

The sequester, which started in March, requires $1.2 trillion in cuts to discretionary and some entitlement spending over 10 years, which is in addition to another $1.0 trillion in cuts to discretionary spending that started in 2011 as a result of the Budget Control Act.

Sequester cuts for 2013 were reduced as part of the fiscal cliff negotiations in January, from $109 billion to $85 billion, and some departments were able to use various one-time mechanisms to soften or delay the impact of sequestration in the short term.

For example, the Department of Labor delayed cuts to two job training programs by several months, shifting most of the impact to FY 2014. Many schools with Title I support or funding for students with special needs were also able to delay cuts until this school year since those grants were awarded before sequestration took effect. However, schools serving Native American reservations and military bases felt the effect immediately because they receive different funding streams.

As we enter a new year, these one-time measures have been used up, and the full $109 billion in sequester cuts will go into effect. Investments in scientific research, new technology, public health and safety will be put on hold; and many services that make a real difference in the lives of vulnerable populations will continue to suffer cuts, including Head Start, the Low-Income Home Energy Assistance Program (LiHEAP), and nutritional assistance through Women, Infants and Children (WIC).

The sequester and other deficit-reduction measures are already creating a drag on the economy – by some estimates, they have slowed economic growth by 1 percent or more.

As the federal budget conference committee negotiates the 2014 budget, they could put the country on better path by replacing the sequester with a more balanced set of budget choices, including raising revenues. It’s time for revenues to be a more prominent part of deficit reduction – the overwhelming majority of deficit reduction enacted since 2010 has come from spending cuts.

What would not be a positive outcome is to replace the sequester with more harmful cuts, including larger cuts to services that promote economic security for low- and middle-income Americans. That approach would create further hardship and economic drag.

-Caitlin Biegler

 

 

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About Clark Biegler

Clark Biegler is the Minnesota Budget Project's policy analyst.
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