Submitted February 20, 2013
What is the Sequester? It all goes back to the "bipartisan" disaster of the 2011 debt-ceiling talks. You may recall that the full Congress and the president raised the debt ceiling limit with concessions. Neither side of our Congress could work well enough with the opposition to do their jobs properly. In an attempt to assure they would solve the debt and deficit and debt ceiling once and for all, our Congress gave up on doing it themselves.
Instead, it outsourced the job to a crackerjack 'super committee' -- a twelve member panel from their own ranks. There were six Democrats, six Republicans; six Senators, and six Representatives appointed by their respective chamber leaders.
On August 2, 2011, when our Congress formally turned over its job to the super committee, it also increased the debt ceiling as part of the deal. Their work was to be completed by November 23. To assure they got the job done, the Congress gave the committee a big caveat.
If they failed to create a real plan, which included at least $1.2 trillion in surgical cuts against the ten year baseline 'budget,' a poison pill called sequestration would kick in automatically on January 2, 2013. Instead of surgical cuts, the sequester cuts would be chain saw mutilations 'across the board cuts' evenly divided between defense and non-defense spending.
Knowing how adverse the Republicans would be to defense cuts, the sequestration was first suggested by the White House. President Obama felt that his sequestration idea, as the poison pill, would result in positive results for Democrats and a lot of blame for Republicans.
The mission of the select committee was to continue the haggling and to eventually strike a deal to get fiscal matters under control. Of course a silent objective was for no member of the committee on either side, to be blamed for anything that would put their reelections at risk.
The super committee dallied and never had its first meeting until September 13, 2011, just about two months before its final work product was due. On November 21, the committee served up a platitude about its work and announced that it was calling it quits:
"After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline."
If you or I did this, we would be fired.
Sequestration was thus scheduled automatically to take effect on January 2, 2013. From November 21, 2011 to January 1, 2013, Congress and the president had over thirteen months to get it right. They chose instead to do nothing.
On January 1, 2013, Congress agreed to put off the sequestration part of the fiscal cliff until March 1. It also agreed to keep the Bush tax cuts in effect permanently for those families making less than $450,000 per year. For all others, the income tax rates climbed.
Additionally, the deal brought back the Payroll Tax cut. You may recall that for 2011 and 2012, we paid only 4.2% of our wages towards Social Security. Beginning January 1, 2013, that tax reverted back to 6.2% for all Americans. That is why everybody felt the pinch with the arrival of their first paycheck in 2013.