How Bad Will The Cuts Be?

Feb 26 2013 @ 12:45pm

Jonathan Cohn expects the sequester to hobble the recovery:

The recovery is already pretty weak. Taking money out of it, which is what the sequester cuts would do, would make it weaker. Non-partisan analysts, including those at the Congressional Budget Office and private firms like Macroeconomic Advisers, predict that the sequester cuts would reduce growth by anywhere from a half to a full percentage point in the next year. That would probably reduce the number of jobs in the economy by a few hundred thousand. The unemployment rate, which has been slowly dropping, would probably remain at around 8 percent.

Sharon Parrott highlights other painful cuts. Alex Koppelman, on the other hand, worries that the sequester won’t be catastrophic:

Obama made much of his reëlection campaign about the necessity of government and the good it does, and his second term will clearly be built on those themes. Important as it is to avoid the sequester going into effect, if he begins his final four years in office by painting doomsday scenarios that don’t actually come true, he may end up undermining everything he has to say about government before he even has time to really get started.

Suderman pounces on this type of argument:

That’s the real fear here: not that sequestration will result in terrible things happening, but that it won’t result in very much at all, that few will notice or be deeply upset by its effects, and that people will learn to live with a government that spends very slightly less than it was planning to over the next ten years (though still far more than it did for the vast majority of the last decade).