Sequestration

With the media and American public focused on the presidential race and never-ending drama of the Republican primaries, Congress has been largely shielded from the spotlight these past few weeks. Whether or not the public is paying attention, Congress has countless issues to deal with before and immediately following the election, and we should not expect the next few months and lame duck session to be any quieter than the current presidential primaries. Tax reform, the expiring Bush tax cuts, once again raising the deficit ceiling and passing a comprehensive budget are all issues that need to be dealt with in the upcoming months. Issues that we all know bring contrasting views from all sides.

Perhaps most notably left off of our current national radar has been the impending sequestration brought on by the Budget Control Act of 2011. Unless the Congress works together to change the effects of the Super Committees failure to reach a deal, we will see across the board cuts starting just as a president assumes office in 2013. The deficit reduction sequester was designed to achieve savings of $1.2 trillion through 2021. The majority of the savings come from discretionary programs that are funded by annual appropriations legislation as opposed to mandatory programs, which are also known as direct spending, or entitlement spending. The required savings are to come half from defense programs and half from non-defense programs.

Arguably most important is that for 2013, all programs will be subject to cuts on an individual basis unless they have already been exempted (for example many programs that benefit low-income beneficiaries). While these issues may be currently out of sight, out of mind, we must remember that the cuts are very real and have fast approaching implications for individuals and businesses that depend on and are accustomed to funding from the federal government. The budget discussion will undoubtedly return to the spotlight over the upcoming weeks and months; however, now is the time to be discussing and make heard the probable consequences.

 

Posted in Articles, Washington, D.C.

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For many businesses, nothing seems more remote than the maneuvering of Beltway insiders. But what happens in Washington and in state and local government is critically important to your company and your industry. With government more involved in business than at any time since the 1930s, organizations that can negotiate the government labyrinth of politics, policy, and process will come out on top.
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