Congress has many incentives to prevent the $100 billion 'sequester', the feared 'fiscal cliff' among them. But it’s main drawback is that it’s a blunt tool for a delicate budgetary task.
Nam Y. Huh/AP/File
How bad would it be if the federal government had to suddenly lop $100 billion off its budget next year, with cuts of 8 or 9 percent in just about every discretionary program?
The question isn't just hypothetical.
This is what is scheduled to occur come January, as a result of the 2011 Budget Control Act – a law designed to nudge Congress toward fiscal responsibility by creating a situation that neither Democrats nor Republicans like.
Sure enough, both sides disparage the idea of "sequestration," as the automatic spending cuts are called. But they haven't yet found a compromise to avoid the event. So either a full-court press by policymakers after Election Day will yield an alternative fiscal plan, or the cuts may happen.
"If you'd asked me three or four months ago, I'd say no chance" that the cuts would take effect, says Rudolph Penner, a former director of the Congressional Budget Office now with the Urban Institute. "I don't say that any more."
The threat has grown more real, even as both sides have sounded dire warnings.
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