Definition of sequestration

Sequestration is a term used to describe a programme of automatic spending cuts in the US aimed at reducing its deficit by $1.2tn.


sequestration in the news

Sequestration came into effect on March 1 2013, after Congress failed to reach agreement over a more targeted deficit reduction strategy. The $85bn in planned cuts were part of a nine-year plan that aimed to see each area of the US discretionary budget cut equally. Military personnel were to be exempt from the automatic cuts but as many as 800,000 civilian Pentagon staff would have pay cuts or be put on temporary unpaid leave. The Federal Aviation Authority would have to temporarily lay off 10 per cent of its workforce as would the Center for Disease Control. There would be no prioritisation.

In February 2013, Roger Altman, former US deputy treasury secretary, writing for the FT said that when the legislation that established the sequestration was passed in 2011, its impact was seen as so blunt that no one would accept it. The idea was to force Congress into a more reasonable approach to deficit reduction. But he observed that Democrats and Republicans were still miles apart on finding a substitute.

President Barack Obama condemned the impending cuts as a "meat cleaver" approach to deficit reduction. Meanwhile, Alan Simpson and Erskine Bowles, co-chairs of the president's 2010 bipartisan debt commission, presented a revised plan to avert sequestration.

In April 2013, sequestration was being blamed for trapping the US in a pattern of steady but mediocre growth, despite a pick up in the housing market. Congress was meanwhile taking a first step to roll back sequestration with a vote aimed at stopping temporary lay-offs of air traffic controllers which have led to flight delays across the US.

In May 2013, an improvement in the US budget deficit was thought to be partly due to the automatic spending cuts known as sequestration.

In September 2013 the FT launched a series that examined the effects of sequestration. The first looked at Fort Campbell which has seen over 3,000 employees forced to take furloughs, creating a ripple of shutdowns across the base.

FT Articles & Analysis

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