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SEQUESTRATION WOULD BE “DEEPLY DESTRUCTIVE”: OMB Report Examines Impact of $1.2 Trillion in Spending Cuts Scheduled for January 2

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“On the nondefense side, sequestration would undermine investments vital to economic growth, threaten the safety and security of the American people, and cause severe harm to programs that benefit the middle-class, seniors, and children.”

On January 2, 2013, $1.2 trillion in automatic across-the-board spending cuts will go into effect unless the U.S. Congress can come to an agreement on a mix of tax increases and spending cuts to offset them. These cuts, officially known as “sequestration,” will apply to military and domestic spending alike and were triggered when the Joint Select Committee on Deficit Reduction, aka the “supercommittee,” failed to agree on a plan to reduce the nation’s deficit late last year.

Issued last week, a new report from the Office of Management and Budget (OMB) says that sequestration would be “deeply destructive to national security, domestic investments, and core government functions.” It finds that sequestration would result in a 9.4 percent cut in defense discretionary funding and an 8.2 percent cut in nondefense discretionary funding, including education funding, for Fiscal Year (FY) 2013. That works out to an approximately $55 billion cut from defense, $38 billion from domestic discretionary programs, $11 billion from Medicare, and $5 billion from other mandatory spending.

For the U.S. Department of Education, an 8.2 percent cut would result in a $4.1 billion decrease in funding. Among individual programs, an 8.2 percent reduction in funding would mean a $1.2 billion cut to Title I in FY 2013, a $973 million cut to special education, and a $146 million cut to career and technical education. In June, the Senate Labor, Health and Human Services, and Education Committee held a hearing that examined the impact sequestration would have on additional education programs. More information on the hearing is available athttps://all4ed.org/publication_material/straight_as/08062012#4.

“On the nondefense side, sequestration would undermine investments vital to economic growth, threaten the safety and security of the American people, and cause severe harm to programs that benefit the middle-class, seniors, and children,” the report notes. “Education grants to states and local school districts supporting smaller classes, afterschool programs, and children with disabilities would suffer.”

The report makes clear that the sequestration was meant only as a “threat” to “force Congress to act on further deficit reduction,” adding that the “specter of harmful across-the-board cuts to defense and nondefense programs was intended to drive both sides to compromise.”

Congressional leaders—who passed legislation requiring OMB to prepare the report—have been eagerly anticipating the report in hopes that it could provide information on exactly how much individual programs would be cut. The report lacks that level of detail; instead it states that it was not possible within the thirty-day deadline imposed by Congress to “identify, review, and resolve issues associated with providing information at this level of detail” for the large number of programs, projects, and activities in the federal budget.

The complete report is available at http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/stareport.pdf.

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Economic Impacts

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