The potential effect of the fiscal cliff on our national security spending just became clearer – and more unsettling.
Friday, amid pressure from Congress, the Obama administration for the first time outlined how some $100 billion in spending cuts scheduled to take effect Jan. 1 will disrupt thousands of federal programs if no action is taken to avert the fiscal cliff.
The automatic cuts, known as sequestration, are a kind of threat Congress implemented on itself in the 2011 Budget Control Act. Yet, they were never meant to actually happen.
As White House press secretary Jay Carney explained in Friday's briefing, the idea was to make the cuts so objectionable that Congress would come up with a more acceptable way to reduce the deficit.
"The sequester was designed to be bad policy, to be onerous, to be objectionable to both Democrats and Republicans," Carney said.
The detailed report is aimed at putting Congress into action. The Office of Management and Budget clarified in its introduction, "The specter of harmful across-the-board cuts to defense and nondefense programs was intended to drive both sides to compromise. The sequestration itself was never intended to be implemented."
But to date, no concessions have been agreed upon and the perilous looming cuts are coming closer to reality. The announcement brings the U.S. nearer to going over the dreaded fiscal cliff, which scores of analysts say will thrust the economy into a recession in 2013 by draining mountains of money out of the already besieged economy.
Fiscal Cliff: Who and What Will Be Affected
The cuts outlined by the White House are as follows:
- Domestic spending cuts would be widespread and would affect government salaries, private-sector contracts for research, air traffic control, border patrol, food safety, the FBI, housing programs, food assistance, after-school programs, and education grants.
- The Federal Emergency Management Agency's resources to react to terrorism and other tragic events would be weakened.
- Scheduled defense cuts would reduce the readiness of numerous non-deployed units, postpone investments in new equipment and facilities, delay needed repairs and shrink services for military families.
- Discretionary defense budgets would see a reduction in its budget by 9.4%.
- Non-defense programs would see their funding axed by 8.2%.
- Medicare provider benefits would be reduced by 2%.
- The National Institutes of Health would lose $2.5 billion.
- The Food Safety and Inspection Service face $86 million in cuts.
- Customs and Border Protection's budget would be diminished by $712 million.
- Other mandatory programs would be subject to cuts between 7.6% and 10%.
The cuts could have crushing effects.
The Congressional Budget Office has cautioned that the cuts "would have a devastating impact on important defense and non-defense programs."
High ranking defense officials have counseled that any deep cuts to defense could hurt our national security.
In addition, thousands of jobs are expected to be lost across myriad industries from defense to government to private sectors.
No Quick Resolution Expected to Fiscal Cliff 2013
Democrats, Republicans, and the Obama administration all agree that the spending cuts would be harmful to a struggling U.S. economy. But no quick resolution is expected.
Neither side wants the cuts, but neither side wants to make concessions, either.
Even the White House is worried.
"No amount of planning can mitigate the effect of these cuts. Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our nation to achieve deficit reduction," the White House reported Friday.
Following the release, Romney took the opportunity to blame President Obama for the stalled economic recovery and for putting our country's security at risk while the cataclysmic cuts come closer to reality.
In his weekly podcast, the GOP presidential hopeful said, "Political gridlock threatens to plunge us back into recession, but instead of seeking bipartisan solutions, President Obama is passively allowing us to go over a fiscal cliff."
Vowing to strengthen the U.S. military if elected president, Romney has repeatedly condemned the $54 billion in defense cuts that stand to materialize starting next year.
"What kind of commander-in-chief forces Americans to choose between massive tax hikes that will undermine the economy and massive cuts to our military that will undermine national security," Andrea Saul, Romney spokesperson said in a statement.
Both parties have repeatedly butted heads over taxes and other pressing matters. It is broadly agreed upon that Congress will not earnestly address the issues until after the November election.
That leaves just a few weeks for lawmakers to come up with an agreeable plan to avert the fiscal cliff.
Related Articles and News:
- Money Morning:
Don't Let Fiscal Cliff Scare You From Dividend Stocks
- Money Morning:
Fiscal Cliff 2013: All Talk, No Answers
- Money Morning:
Fiscal Cliff a Far Bigger Threat Than Most Investors Think