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Breaking Down the Budget Control Act

In a series of blog posts, BPC's Debt Reduction Task Force presented the details behind the Budget Control Act. The posts examined discretionary spending, economic growth, future debt as a percentage of GDP, and the prospect of automatic sequester cuts.

Update

The Sequester: What You Need to Know
February 22, 2013

"Absent a new law passed by Congress, the president has little ability to spare one type of spending and cut more from another. This creates uncertainty in both the public and private sector because there remains much to be determined about how PPAs will be defined by agency administrators and how the cuts will be implemented. This inability to plan is already acting as a drag on economic growth.

"Furthermore, the immediate and across the board nature of the cuts, along with their magnitude concentrated in a seven-month period, will impair economic growth as the year progresses. At BPC, we estimated last year that the sequester would reduce 2013 gross domestic product (GDP) growth by half a percentage point, and would cost the economy approximately one million jobs over the next two years. More recent estimates released by the CBO and Macroeconomic Advisors have roughly confirmed these projections.

"Sequestration’s effect will be akin to that of a slow motion train wreck. The uncertainty has already impacted economic growth, and while there won’t be a sudden “cliff” that occurs on March 1, the ramifications will steadily worsen as time passes."

Read the full post here.