D.C. Watch: Trouble looming for Congress

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One week into the sequester and the sky hasn’t fallen – at least not yet. However, there are still lots of economists and politicians predicting problems ahead.

The Congressional Budget Office predicts that the sequester cuts will cause a 0.6 percentage point reduction in U.S. economic growth this year, and FED Chairman Ben Bernanke puts the impact at 0.5 percentage points and 350,000 jobs.

Cuts to farm program payments will probably be small, but USDA continues to say that employees will have to be furloughed; most notably some of the food safety inspectors. Unless things change, between now and October 1 defense spending will be cut by $43 billion and domestic programs will be cut by $26 billion.

In addition, payments to Medicare providers will be lowered and unemployment benefits will be reduced.

Members of the House Ag Committee questioned USDA Secretary Vilsack about the implementation of the sequester spending cuts at a Congressional hearing this week, especially the plan to furlough food safety inspectors.

Vilsack pointed out that every budget account must be cut and that he does not have the flexibility to shift cuts to different accounts. Further, 87 percent of the budget for the Food Safety Inspection Service is for salaries so furloughing people is the only way to make the required cuts according to Vilsack.

He also claimed that USDA had already cut the discretionary budget by $700 million over the last 4 years and reduced the USDA workforce by 8 percent.

The next debate will be about avoiding a government shut-down when the current continuing resolution (CR) expires March 27.

Since Congress couldn’t pass appropriations bills last year, they extended government funding with a CR. Both parties want to avoid a shut-down, but the old stumbling blocks remain with parties deadlocked on spending cuts vs. more tax hikes. In the end, Congress will probably pass yet another CR to get the country through the rest of fiscal 2013.

As expected, policymakers will have less money available for a new farm bill now. The Congressional Budget Office has revised the “savings” that would have been achieved under the farm bills proposed in the House and Senate last year.

Estimates of savings for both bills were revised down by about $10 billion over the ten year horizon. Savings from cuts in the SNAP program were much smaller than previously thought. Many farm groups are worried that policymakers will revise crop insurance programs as a way to achieve savings when work on a new farm bill resumes.

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March, 11, 2013 at 01:34 PM

The dreadful carnage seems to be less and less as the truth comes out. Best of all we are getting some reductions in spending. So silly all this whining about a tiny bit less funding and possible furloughs when that is the point of budget cutting exactly -- to trim bloated government back to a manageable size. That number 350,000 jobs sounds like a lot but they are bragging we added 260,000 jobs just last month and things are getting even better. By year end we won't even miss those 350,000 ex-government employees.

utah  |  March, 13, 2013 at 12:27 AM

you have said it well we can all save a little which will save a lot

Texas  |  March, 12, 2013 at 01:56 PM

Only government economists and politicians can define a smaller increase in spending our tax dollars as a cut.

Northeast  |  March, 12, 2013 at 04:54 PM

A scare tactic to keep on giving the administration a blank check. They have been offered the latitude to reallocate resources but choose not to have that responsibility. An 88 billion reduction of which only 44 are to be reduced this year but it is an increase of 15 from last year, a net 29 billion reduction. This should be only the begging of all the cuts that need to be made. There is plenty of waste in government. We can eliminate half of the agencies; many just add another level of bureaucracy on top of state bureaucracy. Do we need department of transportation, education and many others? It’s sad to say but since the creation of department of education our education just keeps on getting worse. The solution lets dump more money into it that should solve the problem but only makes it worse. The money is not the problem it’s the program.

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