A Good Alternative to Sequestration Could Help Economy

Blog Post
Tuesday, July 30, 2013

A new Congressional Budget Office (CBO) report makes clear that the failure of elected officials to agree on a responsible alternative to sequestration’s indiscriminate spending cuts will cause immediate damage to the economy. 

The report also shows, however, that ending sequestration without putting a better deficit-reduction plan in place would have serious long-term consequences.

"Although output would be greater and employment higher in the next few years if the spending reductions under current law were reversed, that policy would lead to greater federal debt, which would eventually reduce the nation’s output and income below what would occur under current law," the report states.

The sequestration plans were part of an agreement two years ago to make necessary increases in the federal debt limit. The 2014 sequester would indiscriminately cut $109.3 billion, far more than the $80 billion (originally $85 billion) in sequester cuts this year.

Many members of Congress in both parties have expressed deep concern about sequestration but have generally been unable to resolve partisan differences to find a better alternative. That should be high on Washington’s priority list as the next fiscal year approaches.

External links:How Eliminating the Automatic Spending Reductions in Budget Control Act Would Affect U.S. Economy in 2014 (CBO)How $85 Billion Became $80 Billion; the Story of the Shrinking Sequester (BPC)