To Sequester means to isolate or hide someone or something away. What does that have to do with budget cuts and why is everyone worried about what this verb means for their families and for our country? Here is a brief nuts-and-bolts break down of what the sequester means and how it might impact your unemployment benefits and Michigan families.
What Is It? The sequester is across-the-board, automatic spending cuts for both domestic and defense spending, meant to reduce the deficit. It was triggered by the Budget Control Act of 2011.
Why Do We Have It? The sequester was meant to incentivize Congress to reach a compromise on deficit-reduction. The goal was to come up with a plan that would reduce the deficit by $1.5 trillion over a ten-year period. If they failed to do this (which they did) then the Act would make automatic cuts. The idea behind this provision of the Act was that no one area is more affected than any other area – everything get’s cut, so everyone loses, so Congress had better reach a compromise. However, the compromise never happened.
What Gets Cut? The Act requires an even split between domestic and defense cuts, and the sequester affects both mandatory programs and state’s discretionary spending. Some mandatory programs, such as food-stamp programs, are immune to the cuts.
The cuts were supposed to be even across the board, but some groups feel that the cuts disadvantage certain types of people more than others. For example, many voters worry that the cuts place higher burdens on women than on men.
What Do The Cuts Mean For Michigan, Specifically? Like in every state, cuts in defense, education, parks and recreation, and other government agencies will lead to job loss. Cuts in educational programs like Head Start and work-study to help pay for college will make education harder to obtain for many. The White House put out a Michigan-specific report the projects how many jobs and opportunities will be lost due to each agency’s cut. Here are some examples: 900 disadvantaged children could lose access to child care, 300 teachers and aides could lose their jobs, 10,000 Department of Defense employes would see a substancial pay cut, and more than 4,400 children will no longer be able to receive vaccines for dangerous diseases such as measles, flue, and Hepatitis B.
What Will Happen to My Unemployment Benefits? Part of your unemployment benefits are paid for by taxing employers. This aspect of the UI program is immune to the sequester. However, Emergency Unemployment Compensation, wich was enacted in 2008 to combat the recession, is not exempt. 77,000 people in Michigan receive unemployment benefits, and these benefits will be cut by over 9%. The White House estimates that the unemployed could lose an average of $450.
Job search assistance and training programs will also lose about $1.7 million in funding.
How Will This Affect Me If I Don’t Receive UI Benefits? Economists predict that reductions in unemployment benefits will negatively impact the economy as a whole. It has been estimated that every dollar received in UI benefits generates TWO dollars in economic activity. When the unemployed lose their benefits, everyone loses.