Budget sequestration is a procedure that involves a permanent cancellation of the budget resources by a uniform percentage across all projects, programs, and activities within the budgeted accounts. However, there are exceptions and special rules on individual programs and activities regarding the application of a sequester action (Driessen et al., 2017). Sequester action does not apply in programs such as senior services, veteran affairs, children affairs, and the supplemental security income.
How it came about
In the year 2011, disagreement between the republican and democrats in the congress on reducing government budget deficit led to the creation of a bipartisan committee to come up with a plan to address this crisis (Hu et al., 2018). However, the committee failed to agree on any plan making sequestration to be included in the Budget Control Act of 2011 as a disincentive on the part of the fiscal cliff. The use of sequestration came into force in January 2013 after the formed committee failed to develop a proper budget execution plan.
So far Sequestration has been ineffective and has received opposition from both the government and the public as different state departments have raised concerns that their budgets have significantly reduced making it difficult to run their programs effectively. On the other hand, it has led to job insecurity as the public and the state officers’ fear losing their job and reduction of their salaries (Martin et al., 2015). Additionally, reduced spending will result in reduced revenue collection, which is the primary source of government funding of the country through taxes.
Considering its effects to different sectors of the country, Sequestration should not be kept as it will contribute to significant economic crises that would slow the recovery of the state labor market. Economists predicted that more than 700,000 jobs would be affected and this will not assist the country towards reducing its expenditure but will substantially restrain economic growth. Moreover, concerns of reduced research and development program will see the country lose its young scholars and on the future of scientific research (Martin et al., 2015). Furthermore, some children services will be eliminated to balance the budgets diminished by the federal sequester.
Driessen, G. A., & Lynch, M. S. (2017). Budget Control Act: Frequently Asked Questions. Congressional Research Service.
Hu, R., & Zarazaga, C. E. (2018). Fiscal stabilization and the credibility of the US budget sequestration spending austerity. Journal of Economic Dynamics and Control, 93, 54-66.
Martin, C. (2015). Fixing sequestration and improving the budget process. Center for American Progress.