Once seen as impossibility is now reality. Sequestration is here.
As law required, President Obama signed sequestration into effect Friday night, the White House sending notice just after 8 p.m. that the order was officially put into place.
The federal government now must pare $85 billion from its budget over the final seven months of the federal fiscal year with the cuts coming bluntly from “every program, project and activity,” said the Office of Management and Budget, who sent a report to Congress on Friday outlining the government wide cuts.
“The cuts required by sequestration will be deeply destructive to national security, domestic investments, and core Government functions,” OMB wrote in its report to Congress.
OMB calculates that, over the course of the fiscal year, sequestration requires a 7.8 percent reduction in non-exempt defense discretionary funding and a five percent reduction in non-exempt nondefense discretionary funding, OMB said.
According to OMB, the sequestration also requires reductions of two percent to Medicare, 5.1 percent to other non-exempt nondefense mandatory programs and 7.9 percent to non-exempt defense mandatory programs.
Because these cuts must be achieved over only seven months instead of 12, the effective percentage reductions will be approximately 13 percent for non-exempt defense programs and 9 percent for non-exempt nondefense programs, OMB said.
“The good news is the American people are strong and they’re resilient,” Obama said. “They fought hard to recover from the worst economic crisis since the Great Depression, and we will get through this as well. Even with these cuts in place, folks all across this country will work hard to make sure that we keep the recovery going. But Washington sure isn’t making it easy.”
The final countdown
Unlike in December when Republicans and Democrats in Congress worked until the final minute to reach a settlement to avoid the fiscal cliff and ultimately push the sequestration deadline back until Friday, there were no last second negotiations this time.
President Obama met with House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Republican leader Mitch McConnell and House Democratic leader Nancy Pelosi on Friday, but both sides held firm.
Even if a deal was reached, sequestration would have taken effect as the Senate voted down two proposals on Thursday – one from the Democrats and one from the Republicans – with solutions to stop the sequester and then left for the weekend.
Statement from President Obama
The budget battle
Obama’s plan to avoid sequestration called for a limit on the value of itemized tax deductions and certain tax exclusions over the next decade that would bring in $580 billion in new revenue.
That would mean taxpayers with a tax rate greater than 28 percent would face a tax increase.
Obama’s plan would also close many corporate tax loopholes to lower the corporate tax rate. He aims to drop corporate tax rates from 35 percent to 28 percent for most corporations and down to 25 percent for manufacturers.
In exchange for new tax revenue and a tax overhaul, Obama has offered to reduce spending in health care programs by $400 billion over the next decade.
Those cuts, together with about $2.5 trillion in deficit reduction already achieved over the past two years through spending cuts, would achieve a $4 trillion deficit reduction target, according to the White House.
“Let’s be clear: None of this is necessary,” Obama told reporters at the White House on Friday. “It’s happening because of a choice that Republicans in Congress have made. We shouldn’t be making a series of dumb, arbitrary cuts to things.”
Obama said he still believed the cuts could be replaced, but he wanted a deal that includes more tax revenue by closing what he called wasteful loopholes.
Boehner said he and McConnell told Obama they’re willing to close tax loopholes but only to lower taxes overall, not to replace spending cuts.
“The president got his tax hikes on January 1,” Boehner said. “The discussion about revenue in my view is over. It’s about taking on the spending problem here in Washington.”
The Department of Defense has received most of the attention when it comes to sequestration, as leaders have routinely said the cuts will hamper the Pentagon’s ability to protect the nation and “hollow out the nation’s military.”
In his first public appearance, new Secretary of Defense Chuck Hagel said the country will remain the premiere military force in the world despite the cuts.
“We will not allow that capacity to erode,” Hagel said on Friday.
Hagel said he knows “the budget cuts will cause pain” but said they would not allow the military’s “capability to erode.”
Among the immediate actions to save money, Hagel cited the Navy will idle four wings of aircraft, the Air Force will limit pilot training, and Army units not deploying to Afghanistan will have limited training.
Issa asks agencies
Congressman Darrell Issa, Chairman of the House Oversight and Government Reform Committee, has asked federal agencies to identify unnecessary or wasteful programs within their agency that could be eliminated as an alternative to the spending cuts mandated by sequestration.
“We cannot avert sequestration without a plan to end the undisciplined and unsustainable federal spending that resulted in the sequester in the first place,” Issa said a letter sent to the acting heads of 17 federal agencies. “Raising taxes on the American people for a second time this year is not the solution to sequestration.”
“It is time for the federal government to eliminate wasteful and duplicative programs, in addition to making reductions in non-essential agency programs,” Issa continued. “The President agrees. He cited cutting government spending on ‘wasteful programs that don’t work’ as part of his preferred alternative to the sequester. I am writing to request your assistance in identifying such programs.”
A sample of the letters sent to the agencies can be found here.
The letters were sent to the following agencies:
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Education
- Department of Energy
- Environmental Protection Agency
- Department of Health & Human Services
- Department of Homeland Security
- Department of Housing and Urban Development
- Department of the Interior
- Department of Justice
- Department of Labor
- Small Business Administration
- Department of State
- Department of Transportation
- Department of the Treasury
- Department of Veterans Affairs
Thoughts from the Army CIO
Speaking Thursday at FedScoop’s 3rd Annual MobileGov Summit, Army Chief Information Officer Lt. Gen. Susan Lawrence said sequestration would absolutely affect the force’s readiness.
The hardest part for her, she said, is seeing what could happen to military families.
“As you know the strength of the Army is our people,” Lawrence said. “It’s going to be a very challenging time going forward. We’ll meet with our workforce to discuss the different scenarios, but there will be furloughs and families will be impacted.”
Lawrence did say that the Pentagon’s leadership understands the importance of the work of the CIO and the department’s technology, including the need to have networks in place and running at peak efficiency to keep the warfighter as safe as possible.