Sequestration

In August 2011, EPI published a report, Debt ceiling deal threatens deep job losses and lower long-run economic growth (Issue Brief #331), showing that the premature austerity, deep cuts to public investment, and other features of the Budget Control Act (BCA) threatened to depress economic growth and employment in the near term and hinder U.S. competitiveness in the long run. Our analysis from 2011 remains fundamentally unchanged: No economic good has come from sequestration cuts. Following are summaries of and links to numerous EPI analyses of the economic folly of the Budget Control Act, the “fiscal cliff,” and sequestration cuts.

Reports

Briefing Paper #355, From free-fall to stagnation: Five years after the start of the Great Recession, extraordinary policy measures are still needed, but are not forthcoming (Feb. 14, 2013), presents international and historical evidence against implementing premature austerity cuts and argues instead for using expansionary macroeconomic policy to fight depressions until they are fully ended. EPI’s proposal, Investing in America’s economy: A budget blueprint for economic recovery (Nov. 16, 2012), is a comprehensive budget proposal for how to ensure rapid return to full employment and long-run fiscal sustainability in the context of the “fiscal cliff,” including repeal of sequestration. Issue Brief #345, Navigating the fiscal obstacle course: Supporting job creation with savings from ending the upper-income Bush-era tax cuts (Nov. 14, 2012), provides a less ambitious, more politically feasible roadmap for navigating the “fiscal cliff,” including repealing sequestration and financing job creation with revenue from upper-income households. Issue Brief #338, A fiscal obstacle course, not a cliff: Economic impacts of expiring tax cuts and impending spending cuts, and policy recommendations (Sept. 18, 2012), offers analysis of the Budget Control Act’s sequester and discretionary spending caps in the context of the “fiscal cliff,” including projected impacts on economic growth and employment. Issue Brief #316, For Joint Select Committee, many good options: Progressive revenue proposals would narrow budget gap by trillions (Oct. 13, 2011), provides analysis of the Budget Control Act and a menu of progressive revenue options to replace sequestration with more prudent long-term deficit reduction. Issue Brief #331, Debt ceiling deal threatens deep job losses and lower long-run economic growth (August 4, 2011), highlights the economic risks posed by the Budget Control Act’s austerity features to jobs, economic growth, and U.S. competitiveness.

Blog posts and commentary

The Progressive Caucus’s sensible approach to sequestration: Prioritizing jobs and growth” (Feb. 5, 2013) outlines the economic merits of the Congressional Progressive Caucus’s Balancing Act of 2013 (H.R. 505), which would replace sequestration with progressive revenue and finance near-term job creation measures with more sensible defense cuts. “The importance of revenue revisited: Minimizing the drag of austerity” (Jan. 24, 2013) underlines the importance of replacing sequestration with revenue to minimize the economic drag of the premature austerity on which Congress remains misguidedly fixated. “The congressional GOP has smothered a more rapid economic recovery” (Jan. 18, 2013) notes how Congressional GOP obstructionism has repeatedly impeded faster economic recovery over the last four years, including by hijacking the debt ceiling issue in order to extract discretionary spending caps and sequestration spending cuts in 2011. “At best, budget deal suggests decelerating anemic growth, labor market deterioration” (Jan. 3, 2013) covers the “fiscal cliff” economic drags left by the lame-duck budget deal, including the impact of the remaining sequestration cuts on economic growth and employment. “So the ‘fiscal cliff’ has been addressed. The next priority should be to address the fiscal cliff” (Jan. 2, 2013) notes the failure of the lame-duck deal to address the challenge of overly rapid deficit reduction actually posed by the “fiscal cliff,” notably the failure to address the bulk of sequestration and any of the BCA discretionary spending caps. “Boehner’s ‘Plan B’ would result in an austerity-induced recession” (Dec. 21, 2012) explains how House Republicans’ “Plan B” proposal failed to address the fiscal cliff or stave off an austerity recession, including by proposing replacement of Department of Defense sequestration cuts with much deeper non-defense sequestration cuts. “6 reasons why the debt ceiling should be scrapped” (Dec. 6, 2012) stressed the need to repeal the statutory debt ceiling, particularly in light of the GOP’s hijacking of the U.S. credit rating to extract discretionary spending caps and sequestration spending cuts in 2011. “Since when do we congratulate ourselves just for not going over a cliff?” (Nov. 19, 2012) places the “fiscal cliff” and sequestration in the context of a depressed U.S. economy, noting that the issue goes beyond merely avoiding an austerity-induced recession. “Speaker Boehner pledges to hijack the debt ceiling and jeopardize recovery again” (May 17, 2012) criticizes the Speaker’s pledge to again hijack the U.S. credit rating in order to extract spending cuts even deeper than the discretionary spending caps and sequestration spending cuts. “The fiscal cliff and downgrading U.S. debt” (Nov. 19, 2012) discusses Standard & Poor’s downgrade of the U.S. credit rating resulting from political dysfunction surrounding the Budget Control Act and the hijacking of the debt ceiling issue. “Sequestration will slow the recovery and job growth, period” (Apr. 24, 2012) outlines the economic growth and employment risks posed by both the nondefense and defense components of sequestration.