Kevin Drum at "Mother Jones"...(Explanation of what Sequester Means)

[KoKo]

Looking around for details on how this Sequester will effect us all I found this from Kevin Drum. I don't think it's the whole story...but, it gave some background that I could wrap my brain around for a start of understanding the effects of it all. And, he has an explanation that at least made some of it clearer.

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The Sequester, Explained

—By Kevin Drum
| Fri Mar. 1, 2013 3:06 AM PS

So what gets cut? The sequester is split evenly between defense spending and domestic spending. The domestic half has two parts: Medicare and everything else. For Medicare, the sequester specifies a flat 2 percent cut in reimbursements. Doctors will continue to bill at their usual rate, but they'll only receive 98 cents on the dollar. According to the Congressional Budget Office, here's how the whole thing nets out (see Table 1-2):


Defense: $42.7 billion
Medicare: $9.9 billion
Other domestic: $32.7 billion

Aside from Medicare, how are the other cuts divvied up? The sequester legislation requires the cuts to come evenly from every budget account. This means everything (with a few exceptions) gets cut the same amount. This is an especially stupid way to cut spending, since everyone agrees that some programs are more important than others, but that's the way it is. If you really want to torture yourself, you can read this Office of Management and Budget report, which contains 224 pages listing the sequester amounts from every single agency in the United States government. It's followed by another 158 mind-numbing pages of agency accounts that are exempt from the sequester.

But as stupid as this is, don't get too excited about it. It's only for FY2013, which lasts seven more months. After that, although the total amount stays in place ($109 billion, split evenly between defense and domestic spending), congressional appropriations committees have much more flexibility about how to juggle the cuts.

Aren't we still in a recession? What are these cuts going to do to the economy? Technically, we're no longer in a recession, but there's no question the economy remains weak. A big bunch of dumb spending cuts is about the last thing we need.

That said, the actual impact of the cuts is hazy. Among private forecasting firms, Macroeconomic Advisers figures the sequester will cut GDP by 0.7 percentage points, while IHS Global Insight puts it at 0.3 percent. Back before the sequester was delayed, CBO estimated 0.8 percentage points. Given a consensus growth forecast of about 2 percent for this year, this is a fairly substantial headwind. In terms of jobs, it will probably increase the unemployment rate by about half a percentage point. This is why Fed chairman Ben Bernanke basically told Congress on Tuesday that they were nuts to let the sequester proceed.

MUCH MORE of THIS EXPLANATION AT:

http://www.motherjones.com/kevin-drum/2013/03/the-sequester-explained

[KoKo]

1. Maybe SOMEONE will find this interesting...