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Defense Secretary Leon E. Panetta discusses sequestration with audience members during the Association of Defense Communities’ annual conference in Monterey, Calif., Aug. 6, 2012. (Photo: DOD/U.S. Navy Petty Officer 1st Class Chad J. McNeeley)

Defense Secretary Leon E. Panetta discusses sequestration with audience members during the Association of Defense Communities’ annual conference in Monterey, Calif., Aug. 6, 2012. (Photo: DOD/U.S. Navy Petty Officer 1st Class Chad J. McNeeley)

“Sequestration” is the big buzzword being thrown around these days, so to help better understand the issue, FedScoop created a short guide to summarize its impact on the federal government.

Origin

The term sequestration, as its known in the federal government, was created by the Gramm-Rudman-Hollings Balanced Budget Act of 1985. It called for automatic-spending cuts – called sequesters – to be made if the federal budget deficit exceeded a set of fixed deficit targets.

Today

In an effort to end the debt-ceiling crisis in August 2011, legislators created the Budget Control Act of 2011. The bill included a provision that if Congress failed to produce a deficit reduction bill for the federal government with at least $1.2 trillion in cuts, then it would trigger automatic across-the-board cuts called sequestrations. Congress has until November to pass the necessary legislations or the cuts must be enacted shortly after the start of 2013 with $110 billion coming off the books immediately.

Where the cuts would take place

The mandatory cuts would be split between national security and non-national security agencies evenly, so both would absorb $600 billion each in cuts as a whole and $55 billion in the coming year. These would be added to the $450 billion in cuts that the Defense Department has already announced for the next decade.

Who it could affect

Basically, everyone in the federal government and those that do work supporting the government. Federal agencies will see drastic cuts that will likely lead to large layoffs, pay freezes and the reduction of benefits. Government contractors will have less money to bid for and – in some cases – be forced to remove workers from job sites as the government will no longer be able to pay for their services.

According to the Associated Press, separate studies this summer by the International Monetary Fund and by George Mason University predict that the approach to budget reduction under sequestration would slam the nation’s economy back into a recession and boost the unemployment rate nationally by 1.5 percent by next summer and have a much larger effect in the Washington, D.C. area.

Video

Virginia Congressman Scott Rigell, whose Hampton Roads district, would be significantly hit by sequestration, explains the measure in this video:

Quotable

Secretary of Defense Leon Panetta:

“I’ve made clear, and I’ll continue to do so, that if sequestration is allowed to go into effect, it’ll be a disaster for national defense and it would be a disaster, frankly, for defense communities as well. And frankly, it’s not only true about the DOD budget, it’s also true relating to the domestic discretionary cuts that will deprive communities of the needed federal support they need in areas like education.”

Will it happen?

It’s not certain either way, but probably not. As written, sequestration is meant to be harsh to act as a catalyst for Congress to come up with a better plan and is instead a fail-safe measure to get the necessary cuts one way or another.

With that said, sequestration is the law and if Congress doesn’t come up with a solution, it will become a reality.

  • Get Educated

    I would hardly call the video an explanation of how sequestration works. First, sequestration affects more than the defense budget. It will mean 10%+ cuts to every government function (ie education, health, health research, food and drug safety, transportation, infrastructure (like the roads, bridges, commuter rails you use to get to work), air traffic control and the list goes on and on). Second, the effects would not occur all in one day. Congress could decide to change the law on January 5th and decrease the effects. The real problem is the uncertainty that it causes since we dont know whether it will happen or not and people and businesses need to plan their budgets even if Congress doesnt. Obama has actually put forward two plans that would avoid sequestration in a BALANCED way but both have been rejected to protect tax cuts for millionaires. And, on the defense side of things, dispite the loud cries from the military industrial complex, some are now reporting that the cuts to the DoD budget would not jeopardize our national security.