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| Air Force personnel salute as Air Force One, with President Barack Obama on board, arrives at in the rain at Andrews Air Force Base, Md., Tuesday, Feb. 26, 2013. The president was returning from Newport News, Va., for an event on the automatic budget cuts. |
WASHINGTON
(AP) -- America's leaders have threatened to shut the government down,
drive it over a cliff and bounce it off the ceiling. Now they're ready
to smack it with a "sequester." And it sounds like they mean it this
time.
If no one backs down, big cuts in federal spending begin Friday. Should Americans be worried?
A primer on the nation's latest fiscal standoff - how we got here, who could get hurt and possible ways to end this thing:
---
What, again?
Like
life in a bad Road Runner cartoon, the United States has survived the
New Year's "fiscal cliff," double rounds of debt-ceiling roulette and
various budget blow-ups over the past two years. Now the threat is $85
billion in indiscriminate spending cuts that would hit most federal
programs and fall hardest on the military.
By
law, these cuts known as the "sequester" will begin unfolding
automatically at week's end unless President Barack Obama and Congress
act to stop them.
Why did they agree to a law
like that? In hopes of finally getting the nation's trillion-dollar-plus
annual budget deficits under control.
---
Isn't deficit-cutting good?
Obama, nearly all of Congress and plenty of economists say two things:
1) The budget deficit needs to be reduced.
2) The sequester is the wrong way to do it.
"Only a fool would do it this way," says Paul Light, a budget expert at New York University. "Primordial. It's beyond belief."
It makes him think of the movie "Dr. Strangelove," with Slim Pickens riding bronco on an atomic bomb, waving his cowboy hat.
The
sequester was designed to land with a mighty splat - to create such a
mess if allowed to occur that lawmakers would do the right and honorable
thing and negotiate a measured, meaningful and discerning package of
deficit reduction to head it off. But that didn't happen, so the
sequester is about to.
And, yes, that should
mean progress on the nation's debt. The sequester is one of several
developments expected to restrain the nation's red ink after four
straight years of deficits topping $1 trillion.
Yee-haw.
---
Are the cuts really that bad?
It's
unlikely they will be as bad - or at least as immediate - as some
overexcited members of the Obama administration have made out. But the
cuts have the potential to be significant if the standoff drags on.
Early
on, about 2 million long-term unemployed people could see a $30 cut in
benefit checks now averaging $300 a week. Federal subsidies for school
construction, clean energy and state and local public works projects
could be pinched. Low-income pregnant women and new mothers may find it
harder to sign up for food aid.
Much depends on how states and communities manage any shortfalls in aid from Washington.
Furloughs
of federal employees are for the most part a month or more away. Then,
they might have to take up to a day off per week without pay.
That's
when the public could start seeing delays at airports, disruptions in
meat inspection, fewer services at national parks and the like.
An impasse lasting into the fall would reach farther, probably shrinking Head Start slots, for example.
Much
of the federal budget is off-limits to the automatic cuts. Among
exempted programs: Social Security, Medicaid, food stamps, Pell Grants
and veterans' programs.
Even so, officials
warn of a hollowed-out military capability, compromised border security
and spreading deterioration of public services if the sequester
continues. It's "like a rolling ball," said Homeland Security Secretary
Janet Napolitano. "It keeps growing."
---
Maybe it's fiscal-crisis fatigue.
Americans
are yawning this one off. Only 27 percent of those surveyed for a Pew
Research Center/USA Today poll last week said they had heard a lot about
the looming automatic spending cuts.
Less
than a third think the budget cuts would deeply affect their own
financial situation, according to a Washington Post poll. Sixty percent,
however, believe the cuts would have a major effect on the U.S.
economy.
That's what economists and business people are nervous about.
The
political standoff is the factor that economists blame most for the
slowing economy, according to the latest Associated Press Economic
Survey. The uncertainty is causing businesses to hold back on investment
and hiring, and it's making consumers less confident about spending,
economists warn.
---
How did it come to this?
Obama
and congressional Republicans have been deadlocked over spending since
the GOP won control of the House in 2010, with a big boost from tea
party activists who champion lower taxes and an end to red-ink budgets.
House
Republicans refused to raise the nation's borrowing limit in 2011
without major deficit cuts. To resolve the stalemate, Congress passed
and Obama signed the Budget Control Act, which temporarily allowed
borrowing to resume, set spending caps and created a bipartisan
"supercommittee" to recommend at least $1.2 trillion in deficit
reduction over 10 years. Republicans and Democrats on the committee
failed to compromise, however.
That triggered
the law's doomsday scenario - the so-called "fiscal cliff" package of
across-the-board tax increases and spending cuts.
In
a New Year's Eve deal, Obama and Congress agreed to raise taxes on some
of the nation's wealthiest earners. And they postponed the spending
cuts for two months - until Friday.
That was supposed to buy time to cut a deal.
---
No surrender?
As the days melt into hours, neither side shows sign of blinking - or even negotiating.
Obama
insists on a blend of targeted spending cuts and tax increases.
Republican leaders reject any more tax increases and say the savings
must come from spending cuts.
While both sides
talk about reducing the deficit, Obama and other Democrats say this
must be done gradually, to avoid wounding an already weak economy.
The
president is taking his case to the people, blasting Republicans at
campaign-style events. GOP leaders, just back from a congressional
vacation themselves, are publicly grousing that Obama should be
bargaining with them, not grand-standing.
---
Is there a way out?
Expect
intense negotiations to begin in Washington if enough Americans begin
yelping about the pain from reduced federal spending.
Obama
and Congress could agree to pare down the budget cuts to a more logical
package of reductions, perhaps with some tax changes, too. Such a deal
could also retroactively restore spending where they want to.
The "sequester" isn't the only line in the sand, however.
On
March 27, legislation that has been temporarily financing the
government expires. Without agreement to extend it, the threat of a
government shutdown looms again. Later in the spring, it will be time to
raise the nation's debt limit again.
So far,
two years of budget crises have been settled with quick fixes. They have
barely dented the underlying disagreement over how to reform Medicare,
Social Security, taxes and spending to address the nation's long-term
deficit problem.
If those festering questions remain unanswered, the U.S. economy will remain a hostage to politics.
