9 Ways the Sequester Will Affect You
For most of the past two months, politicians and pundits have predicted that, like the government's previous artificial fiscal disasters, sequestration was going to be resolved at the last minute. But "hope" isn't all that effective a strategy when one is hurtling toward the abyss, and it looks like sequestration might actually happen after all. While Republicans in Congress are rushing to shift blame for the fiscally suicidal plan onto President Obama, and congressional Democrats unable to attract any GOP moderates toward a compromise, the massive budget cuts that we've been dreading are about to arrive.
There's a bright side, sort of: The $1.2 trillion that is scheduled to get hacked out of the federal budget over the next decade would, in a simple world, go a long way toward cutting the deficit. The trouble is, we don't live in a simple world, and using a sweeping policy like sequestration to attack a comparatively minor problem like the deficit is sort of like amputating an arm to fix a hangnail. The cuts would ripple across the economy, slashing federal programs, putting people out of work and quite possibly sending the economy tumbling back into recession -- which would shrink tax revenues, and make our deficits larger, not smaller.
Even if we dodged a recession, shrinking consumer spending, paired with rising unemployment would still translate into reduced tax revenue. At the same time, we'll be paying out more money for social programs to cover people who aren't able to support themselves because their government-funded or -supported jobs have disappeared. In other words, we'll be right back where we are right now, borrowing money to cover the vital expenses of running the nation.
And if the rating agencies cut our credit rating in light of Congress' apparent desire to to cut the legs out from under an economy in the midst of a slow recovery, borrowing that money could get more costly too.
As numerous pundits have already pointed out, the sequester will be especially tough on anyone employed by the federal government. In other words, you might want to batten down the hatches if you work for a government agency, the military, a military contractor, or anyone with a federal government contract. For that matter, you might want to dust off your résumé if you work for a fast food joint that serves a lot of military personnel, a store that sells coffee to people who work for public schools, or any other company within two or three degrees of separation from anyone who relies on federal money.
But even if you don't work for the CDC, or run a Jiffy Lube across the street from a military base, you still need to be prepared for sequestration. After all, many of those government employees who will be looking for work are currently doing jobs that matter to you. Here's a look at nine unexpected ways that sequestration will probably touch your life:
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Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.
