Sequestration Could Harm Wisconsin Families, Jobs, and Economy

Monday, February 25, 2013 at 2:18 PM by

Some Alternatives Could be Even Worse

Unless Congress can come to an agreement, a series of deep cuts in the federal budget will take effect starting March 1st. This combination of automatic cuts – called sequestration – has the potential to cost Wisconsin thousands of jobs and harm the state’s economy.

As part of the last-minute deal at the end of 2012 to avert the fiscal cliff, Congress pushed sequestration back by two months. Now the deep cuts are rapidly approaching, unless Congress can agree on an alternative.

If the sequester takes effect in its current form, here are some impacts on Wisconsin this year, according to the White House:

  • $10.1 million less in federal money for education for Wisconsin students with disabilities;
  • $8.5 million less for public education in Wisconsin
  • $3.9 million less in federal money for services that protect Wisconsin’s water quality and air quality;
  • $1.5 million less for fish and wildlife protection;
  • Elimination of Head Start and Early Head Start services for 900 children in Wisconsin;
  • Up to 500 disadvantaged children could lose access to child care – which means their parents would then have trouble holding down a job;
  • 550 fewer low income college students would receive financial aid, and more than 400 fewer students would get subsidized work-study jobs that help students earn money to pay for college;
  • 3,000 civilian Department of Defense employees in Wisconsin would be furloughed.

A blog post today by the Center on Budget and policy Priorities examines the national effects in a few other areas.  They report that the 3.8 million long-term unemployed workers receiving federally funded unemployment benefits will lose about 11 percent in their weekly benefits, a cut of roughly $130 per unemployed worker each month.  

The automatic budget cuts included in sequestration would harm Wisconsin’s families. But it would be even worse to replace sequestration with deeper cuts in domestic programs, as some members of Congress are advocating.

To minimize the harm done to families in Wisconsin and other states, Congress should use a balanced approach to replace sequestration, with at least one dollar of revenues raised for every dollar in spending cuts. One possibility for new revenues would be to eliminate the carried interest loophole, a costly tax break that gives preferential tax rates to profits made by private equity and hedge fund managers and primarily benefits the wealthy.

Tamarine Cornelius

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