The Word That Almost Dropped From The News

TantrumThe last few weeks of the news has been replete with Buzz Words: Shutdown, Default, Debt Ceiling, Affordable Care Act… The word that’s been lost in the shuffle is the S Word — Sequester.

Remember when Nevada Governor said the Sequester wasn’t going to be a necessarily bad thing? On February 28, 2013 Governor Sandoval assured residents of the Silver State the sequester wasn’t going to have any immediate impact:

“The federal “sequester” cuts begin Friday in what Sandoval described as a “gradual slowdown” of federal government.  “It’s not like we’re going to wake up tomorrow and the money won’t be there,” he said at a briefing to the press at the capitol.

He said his administration has prepared for the cuts beginning this past Fall, when Congress began to address the potential for mandatory federal budget cuts. Sandoval said the state has more than $15 million set aside to mitigate the budget cuts.” [LVSun]

However, by July 2013 some cracks were beginning to show.  It seems Nevada and Louisiana were reported as not having made preparations for the evaporation of federal funds to support the Emergency Unemployment Compensation Program.  States contribute to the unemployment benefits through their unemployment insurance programs for the first 26 weeks a person is unemployed, with the EUC kicking in for a total of 47 weeks.  [Pew] The other shoe dropped in August:

“More than 20,000 Nevadans will see a 59 percent reduction in their federal extended unemployment benefits beginning the week ending August 31 because of federal budget cuts known as sequestration, the state’s Department of Employment, Training and Rehabilitation reports.

The federal sequestration cuts will only affect federal extended benefits, also known as Emergency Unemployment Compensation, which begins after a claimant has exhausted their regular unemployment benefits which typically last up to 26 weeks, according to a news release.” [CarsonNow]

Perhaps the state could adapt to losing $9 million in funding for elementary and secondary schools, and $3.8 million in support for Special Education services.  Maybe the state could keep Head Start programs from eliminating some 300 youngsters from their rosters?  Could the state adjust to cover $1,156,000 from the Clean Water funding? Or, $764,000 in grants for Fish and Wildlife programs? Could the state adapt to the loss of $12.1 million in defense spending?  The furloughing of some 3,000 jobs in defense related employment?

The sequester also imperiled $258,000 in funding for Nevada’s efforts to upgrade its planning to address public health emergencies, another $78,000 for children’s vaccinations, and $$690,000 for sustaining programs to treat drug and alcohol abuse.  [SeqFacts.pdf]

In the meantime, Nevada’s Department of Employment, Training, and Rehabilitation launched a “calculator” to assist the long term unemployed calculate the reduction in their unemployment insurance benefits.   As of September 5, 2013 benefits for those unemployed longer than 26 weeks were cut by 59%. [TP]

On September 20, 2013 Governor Sandoval was happy with the employment numbers.

“I am pleased to see that August brought with it the strongest month to month job gain since April 2005,” Governor Brian Sandoval said. “After all of the monthly ups and downs, we appear to be on track to add approximately 20,000 jobs in 2013, on top of the combined 30,000 created in 2011 and 2012. While recent evidence suggests that we are headed in the right direction, our stubbornly high unemployment rate illustrates that much room remains for improvement.”  [DETR pdf]

However, things didn’t look quite so rosy from the U-4 and U-5 perspectives, those euphemistically referred to as “discouraged workers” — translation: I’ve stopped looking for work because there’s nothing out there for me.  Nevada’s U-4 rate was 11.3% and the U-5 rate was 12.5%.  [BLS] That was then, now we have Sequestration on Steroids.

The federal government shutdown means that support for tribal members will diminish, 5% of VA employees in Washoe County have been furloughed, the federal courts have enough money to keep going until October 15. [RGJ] By October 8, 2013 Governor Sandoval wasn’t quite so optimistic about the effect of slimming down the federal government.

His  list of agencies and programs on the chopping block included SNAP, WIC, both of which would be out of money by November 1.  The Nevada National Guard and the Unemployment Insurance Benefits program would be looking at furloughs, and the Governor wasn’t pleased about having to choose between funding milk for infants and toddlers and paying for the National Guard. [LVRJ]

The Governor may not be getting much assistance from the House Republican caucus and their shutdown proposal:

“Many House Republicans, leaving a closed-door party caucus earlier Thursday that at times grew contentious, said they would support their leadership’s short-term debt limit proposal. But they said they would do so only if Mr. Obama agreed to negotiate a broader deficit reduction deal, with big savings from entitlement programs.” [NYT]

There are strings on this package.  The first thread is that the Republicans are demanding that the Treasury Department’s authorization to apply extra-ordinary measures to prevent a federal default be stripped.  We should note that for all intents and purposes the Treasury has kept the default at bay since September 25th.  [HuffPo]  The second thread is permission from the Obama Administration to “negotiate a broader deficit reduction deal, with big savings from entitlement programs.”   This could make sequestration look like child’s play.

We know what the House Republican Sequester on Steroids might look like, we can look to the original demands made by their caucus when the current deadlock started. [TP]  These five will suffice to indicate the direction the House Republicans intend to take:

1. A balanced budget amendment — one of the sillier ideas ever proposed by any political entity, if for no other reason than every family budget includes debt (cars, houses, student loans).  2. Medicare Privatization.  The GOP ran this idea up the flag pole, only to have it flap in a gale of opposition from people who don’t want the Medicare program to be transformed into a coupon project.  3.  Means tested Social Security — an exceptionally unpopular idea.  4. Eliminating Social Service Block Grants — which would leave the Sandoval Administration in a bind tighter than the one in which it finds itself at the moment.   5. The restriction of the Child Tax Credit — a proposal guaranteed to draw fire from families with children. (More here.)

If we thought the sequester was a bad idea — this list of bargaining points is, indeed, Sequester on Steroids, and like those rather dangerous drugs, it should be avoided.

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