Column: The Impact of Sequestration

By Congressman Scott Tipton

Sequestration is here, leaving many uncertain about what’s next.

One of the major problems with the President’s sequester is not that it initiates a needed reduction in federal spending, but that its unwieldy nature casts a broad shadow of uncertainty with regard to how those spending cuts will be implemented.  Nobody knows for certain the extent to which sequestration will transform the federal government. Considering that the cuts amount to $85 billion reduction from a bloated $3.7 trillion in federal spending this year, the effects may prove to be minimal.

Sequestration will reduce federal expenditures by approximately 2.3 percent over the next seven months, about $1,150 less for every $50,000 the federal government plans to spend, which is comparable to the 2 percent tax increase most American families are now paying because of the expiration of the payroll deduction tax credit earlier this year. An American family making $50,000 a year is now taking home $1,000 less per year.  That amounts to a mortgage payment, two semesters of books for a college student, or a couple months’ worth of groceries, and contributes to the highest tax burden since 2008 for most U.S. households.

On top of bearing the brunt of this tax increase, many families have made drastic changes over the past few years to make ends meet.  According to a study conducted by two former census officials, from 2009-2012, median household income fell 4.8 percent.  A family making $50,000 in 2009 made $2,400 less by 2012.

Between the increase in taxes and dwindling incomes, January of 2013 was extremely tough on families. According to a report by the Commerce Department, individual incomes plunged 3.6 percent in January, and disposable income dropped 4 percent, the steepest decrease since 1959.  

While American families have seen their taxes go up and their incomes shrink over the past few years and are doing all they can to weather the storm, the federal government continues to increase spending, and will collect more revenue in 2013 than ever before--$2.7 trillion.

At the end of the day, sequestration is forcing the federal government to do what American families have been doing for some time—tighten its belt.

While reducing federal spending is a good thing—and drastically needed given our nation’s $16.5 trillion debt and trillion dollar deficit spending—it could have been done more strategically, and in a way that would have prevented the speculation and uncertainty created by sequestration.

This uncertainty stems from the broad scope in which the cuts are applied and the discretion federal agency heads will have to direct budget cuts.  In many cases, federal agency heads will determine how budget cuts are implemented in their agencies.

It is my hope that as sequestration goes into effect, agency officials when possible implement cuts to eliminate waste, bureaucracy and inefficiency in government, and minimize the impact to valuable programs.

Ultimately, the uncertainty created by sequestration was avoidable.

The House passed two measures to replace the cuts in sequestration with targeted budget reforms to eliminate government waste, slush funds and duplicative programs.  These efforts fell upon deaf ears in the Senate with the President unwilling to push for them.  The President had 18 months to present an alternative solution to sequestration, but instead of identifying needed spending cuts, he moved the goalpost, insisting that revenue is the basis for America’s debt problem, not spending.  The Senate followed that with a weak last minute vote to replace sequestration with tax increases, and it failed.

Given that most families are already taking home less income and paying more taxes, while the federal government is bringing in more tax revenue than ever, I believe that spending is the problem, and that our budget crisis must be solved through responsible spending reforms. The coming months will bring robust budget debate, and ultimately its outcome will shape the future of our nation.

The ends of this debate shouldn’t be political, but about doing what’s right for our nation.  We must reduce spending, and put our country on a sustainable course so that we pass the American dream on to our children, not just a maxed out credit card. I stand ready to work with my colleagues of all political stripes to advance this goal.