As the next big fiscal deadline draws near, Members of Congress of both parties are testing the waters of public sentiment and considering options for the scheduled deep federal spending cuts known as “sequestration.” The Office of Management and Budget (OMB) now calculates that sequestration will require an annual reduction of roughly 5 percent for nondefense discretionary government programs and roughly 8 percent for defense programs. Says OMB, “However, given that these cuts must be achieved over only seven months instead of 12, the effective percentage reductions will be approximately 9 percent for nondefense programs and 13 percent for defense programs.”

According to the Congressional Budget Office (CBO) the latest estimate for the sequestration cuts look like this: budgetary resources for defense (other than spending for military personnel) will be cut by around 8 percent across the board, and non-defense funding that is subject to the automatic reductions will be cut by between 5 percent and 6 percent. According to that estimate, discretionary outlays will drop by $35 billion and mandatory spending will be reduced by $9 billion this year as a direct result of those procedures; additional reductions in outlays attributable to the cuts in 2013 funding will occur in later years.

Will Congress avoid sequestration? Some Democrats are considering a replacement strategy that includes tax loophole elimination and different spending cuts. Of course, one person’s “loophole,” is somebody else’s important tax incentive. ANLA and the Small Business Legislative Council are keeping an eye on the list that emerges. While some pain across the economy is pretty much inevitable, “fair and balanced” will be the watchwords for the next three weeks.

There is another possible outcome. There might be a deal that alters the sequester so the agencies have to deal with the top line cut number but they get to pick and choose how to achieve the savings.

There are three reasons the average business owner should care about how the nation’s fiscal woes are addressed. For one, many economists fear that sequestration is a blunt tool that may send the economy back into a downturn. Secondly, some cuts could hurt or even jeopardize programs that are important to the green industry. Examples would be federal investments in research, foreign pest prevention, and infrastructure spending. Finally, though, a collective failure to get the nation’s fiscal house in order could have lasting negative implications for American strength and competitiveness in the years ahead.

Filed under: legislation