Sequester's Slow Fiscal Squeeze Starts

The president signed an order enacting the $85 billion cuts Friday night.

By Jon Schuppe
|  Friday, Mar 1, 2013  |  Updated 10:33 PM EDT
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Sequester refers to the harsh federal spending cuts that will kick in if Congress can't reach a deal. Learn how these cuts might effect you.

CNBC

Sequester refers to the harsh federal spending cuts that will kick in if Congress can't reach a deal. Learn how these cuts might effect you.

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A wheelchair-bound woman in rural Illinois worries she'll no longer get a ride to the doctor.

A young teacher at a Head Start center in Los Angeles wonders if she'll lose her job — and what will come of the preschoolers who depend on her.

A major in the Pennsylvania National Guard girds for staff cuts that could hinder troops' ability to respond to a flood or snowstorm.

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Small business owners in the Washington, D.C. area weigh the consequences of lost federal contracts.

So much uncertainty, and nothing to do but wait.

The slow squeeze of a federal budget sequester began to ripple across the country Friday, leaving thousands of workers in danger of unemployment, threatening social service organizations with less funding and throwing the future of military programs into disarray. The automatic across-the-board spending cuts began to go into effect after President Barack Obama signed an order enacting them Friday night, and they will leave few corners of government untouched.

The sequester won't seem like that big of a deal at first, because it will take time for the downsizing to impact everyday life, analysts say. Federal agencies will try to deal in ways that will minimize impact: canceling training sessions, postponing repairs, delaying payments on contracts. But if the sequester is allowed to completely unfold, within weeks federal workers could be forced to take unpaid time off and businesses that rely on government cash could be left scrambling.

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Federal courthouses could close one day a week. FBI agents may have to take time off their investigations, and air traffic controllers may be told to stay home. National Historic Sites and federal parks may limit hours.

The looming cuts have Monica Guerrero, a recent college graduate who teaches at the Little Stars Head Start program in the Westlake section of Los Angeles, scared that her employer won't have enough money to keep her on its payroll.

"Without a job, owing those loans, my payment of my home, and the children, you know, they won't be as prepared for kindergarten," Guerrero told NBC Southern California.

In 2013, the sequester will extract more than $85 billion from the federal budget, including $42 billion from defense, $28 billion from domestic discretionary spending, and nearly $10 billion from Medicare. The White House has prepared a list of what those initial cuts will look like.

Major Angela King-Sweigart of the Pennsylvania National Guard has been watching the failed negotiations in Washington with growing anxiety. The sequester could mean furloughs for 26,000 of her agency's civilian workers, which could leave her short of enough support staff to effectively deal with a disaster.

"We're ready to be prepared to serve our country," King-Sweigart told NBC Philadelphia. "But I think people personally have some anxiety as far as what's going to happen with their jobs and the impact it'll have on their families."

And that's just year one. The sequester mandates a total of $1 trillion in cuts through 2021, although few analysts believe that politicians will allow it to go on that long.

For Carol Beaney of Crescent City, Ill., the downsizing means that a local nonprofit agency may not be able to send the medical van that carries her in her wheelchair to the doctor.

"I sincerely hope (the White House and Congress) are never in my position and have to listen to their future being debated like that," Beaney told the Associated Press.

At a forum with federal lawmakers this month, small business owners in Prince George's County, Md., expressed concern about being able to stay solvent through a protracted sequester.

"If funding for government contracts, for example, should become scarce, or disappear, then that certainly would reduce our opportunities to continue to operate, not to mention growth and expansion," one of those owners told NBC Washington.

On the New Jersey shore, communities wrecked by Hurricane Sandy last year hope to rebuild with help from the federal government, but the sequester could delay funds that could be used to raise homes in flood-prone areas, NBC New York reported.

All of this is happening because of a battle in Washington over the federal deficit, which is projected to skyrocket in coming decades. In 2011, Congress settled a fight over raising the country's debt limit by passing the Budget Control Act, which set a Jan. 2, 2013 deadline to find ways to cut $1.5 trillion from the deficit. That failed.

Faced with the combination of the sequester, the expiration of Bush-era tax cuts and a scheduled reduction in payroll taxes — a confluence of events known as the "fiscal cliff" — President Barack Obama and lawmakers struck a deal at the end of 2012 that let the payroll tax lapse, raised tax rates for wealthy households and delayed the sequester deadline to March 1.

Since then, negotiations have gone nowhere. Obama asked for a more "balanced" reduction plan that included eliminating tax breaks for the wealthy, while Congressional Republicans said they were not going to give in on any more tax increases, and seemed willing to allow the defense budget to suffer if it means forcing the rest of government spending to shrink.

Obama and key lawmakers failed to strike a deal in meeting one last time Friday, and Obama was set to sign an order executing the sequester.

In his opening prayer Thursday, the Rev. Barry Black, the Senate's chaplain, invoked the stalemate.

"Rise up, oh God, and save us from ourselves."

God, it appeared Friday night, declined to intervene.

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