On Friday, March 1, massive government spending cuts, known as sequestration, went to effect as policy makers failed to reach an alternative means of budget management. Sequestration is projected to result in dramatic shifts to service, safety, and travel. As the saying goes, “When America sneezes, the world catches a cold.” Thousands worldwide are expected to feel effects once certain government agencies make adjustments.
Here’s a brief breakdown of the sequester and how it can affect you as a consumer.
What is sequestration?
Sequestration refers to a series of automatic spending cuts to defense and domestic government agencies, totaling up to $1.2 trillion over the next ten years. The sequester encompasses an attempt to control the US national debt after Congress agreed on $2 trillion in cuts during a political standoff to avoid hitting the debt ceiling. Congress laid out $1 trillion in a debt ceiling bill and put the rest into an economic apocalypse that would ensue if Congress failed find more efficient means of spending reductions otherwise. The “super committee” founded in 2011 failed to create a less painful plan to cut spending, thus putting sequestration into effect.
What does this mean for the economy?
When the government makes drastic spending cuts or operates under a state of fiscal crisis, businesses get worried and consumerism freezes. The cuts will slash jobs from federal and state funded agencies and major investors become wary of where their money lands, operating more cautiously. The Congressional Budget Office estimates that sequestration will slash jobs and slow economic growth by 0.6%.
How will this affect the average American?
Sequestration will cut spending to government agencies, including Department of Health, Department of Labor, and several others, creating these possible effects:
- Cost of certain foods and meats will rise and risk facing a shortage.
- Weaker defense system with 80% of ground forces stopped, frozen civilian hiring, shut down air-wing carriers, thousands of civilian or part time military employees laid off or furloughed, and cuts to the FBI.
- Decreased treatment for mental health and less preventative care for cancer, HIV/AIDS, and other vaccinations.
- Decreased safety procedures in the workforce.
- Fewer and slower repairs for natural disasters such as Hurricane Sandy.
- 70,000 low income families could be left without pre-school and daycare support.
- Close campgrounds or restricted hours of operation by National Parks and Rec. service.
- Longer lines and more lenient security at the airport.
- Decreased unemployment benefits and organizations funded for the benefit of the disabled and elderly.
As the future looks bleak for government spending and the American dream becomes more of a harsh reality, time is of the essence for you to build your business! Social Security checks are slowing down, jobs are being slashed, and benefits are reducing. How much longer can you wait for “the right time” when the times are getting tougher?
The faith is in your feet, so keep trudging and create your own reality from your dreams!