The sequester spending cuts set to kick in March 1 address a serious long-term problem. But are they needed this year and in this way? No one thinks it's a perfect step.
J. Scott Applewhite/AP
The federal government is about a week away from major spending cuts called the "sequester," which are poised to affect most federal programs in a sudden and significant way.
But is this focus on fiscal discipline really necessary?
Well, yes and no – and if that sounds wishy-washy, hang in there.
"Yes" is the long-term answer. Persistent federal deficits driven by increases in entitlement spending must be dealt with. If they are not, forecasters say, the rising national debt will, at some point, significantly damage the country’s economic health. The debate is about when that damage will arrive, not whether the problem is a real one.
"No" is the shorter-term answer, because economists are divided about whether the federal government should tighten up on spending during the current fiscal year. Even those who support spending cuts don’t like the rigid nature of reductions that mandated in the sequester, which are split equally between defense and a wide range of non-defense programs.
In the end, if the sequester forces Congress to talk constructively about the shape of fiscal policy, it could serve a purpose beyond the spending cuts.
“Debate is healthy and long overdue on entitlements,” economist John Silvia of Wells Fargo writes in a recent analysis of US fiscal affairs. Programs like Medicare, Medicaid, and Social Security “make up the largest share of federal spending and the fastest growing segment of spending.”
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