The federal government will have to slash $85 billion between now and the end of September after Congress and the White House failed to reach an agreement to avert sequestration last week.  

The $1.2 trillion sequestration – or across-the-board cuts to the discretionary budget mandated by the Budget Control Act of 2011 – will affect the function of nearly every federal agency.

Read more: Analysis: Impact of sequestration on non-defense discretionary spending

Given that the discretionary budget has been slashed by $1 trillion in 2011, the sequester cuts will severely weaken the federal government’s ability to secure the border, conduct effective foreign policy to protect American interests abroad, counter terrorist threats, take care of military veterans, ensure food safety, conduct meat and poultry inspections, process tax returns, review visa applications, provide housing assistance to homeless and disabled Americans, grant permits for oil and gas development on federal lands, ensure the safety of travelers, and invest in education and science and technology research to spur innovations that create jobs in the U.S.

“These cuts will hurt our economy. They will cost us jobs,” President Barack Obama told reporters after meeting with Congressional leaders on Friday. “At a time when our businesses have finally begun to get some traction – hiring new workers, bringing jobs back to America – we shouldn’t be making a series of dumb, arbitrary cuts to things that businesses depend on and workers depend on, like education, and research, and infrastructure, and defense. It’s unnecessary. And at a time when too many Americans are still looking for work, it’s inexcusable.”

According to the Office of Management and Budget, sequestration will result in a $85 billion budget shortfall across the federal government this fiscal year. Defense discretionary spending will be reduced by 7.8%; non-defense discretionary spending will be reduced by 5%; and Medicare spending will be reduced by 2%.

The sequester will result in 750,000 job losses and will lower economic growth by 0.5% to 0.7% this year alone, according to Jeffrey Zients, Deputy Director for Management.

Just before signing the sequester order for this fiscal year, Obama called on Republicans and Democrats to compromise and replace the remaining sequester cuts before the next fiscal year begins on Oct. 1, 2013.

“I do believe that we can and must replace these cuts with a more balanced approach that asks something from everybody: Smart spending cuts; entitlement reforms; tax reform that makes the tax code more fair for families and businesses without raising tax rates – all so that we can responsibly lower the deficit,” said Obama.

The “Stop the Sequester Job Loss Now Act” offered by House Democrats would replace the 2013 sequester with a mix of spending cuts and revenue increases.

H.R. 699 – sponsored by Rep. Chris Van Hollen (D-Md.) – would lessen the spending cuts to defense and non-defense discretionary programs by $27.5 billion from the current reduction level of $85 billion in FY 2013.

Among other things, Van Hollen’s bill would protect veterans programs from the sequester and extend farm subsidies for another year, except for direct payment programs.

“The agriculture safety net must be better targeted, while continuing to help farmers effectively manage risk. Direct payments – made regardless of yields, prices, farm income or size – are difficult to defend in times of record crop yields and prices,” Van Hollen explained.

The $27.5 billion in cuts would be replaced by tax revenues generated by closing loopholes benefitting big oil and gas companies, such as the Section 199 deduction, the “Last-In, First-Out” (LIFO), and foreign tax credits.

On the revenue side, the bill would also implement the so-called “Buffett Rule” to impose “a minimum effective tax rate of 30% on adjusted gross incomes above $2 million.” 

“The Buffett Rule is meant to ensure that middle class families will not confront higher effective tax rates than the wealthy,” according to Van Hollen.

However, Republican House Speaker John Boehner has refused to allow a vote on Van Hollen’s bill, arguing that since the House has “done its work” and that it is up to the Democratic-controlled Senate to pass legislation to avert the sequester.

“We’ve passed legislation to tackle the tough challenges that America faces only to see our Senate colleagues do nothing,” said Boehner. “This sequester was the President’s idea; his party needs to follow through on their plans to replace them.”

The GOP’s plan would offset the sequester cuts for defense discretionary programs by imposing steeper cuts on non-defense discretionary programs, such as food stamps, health care and anti-obesity programs, and the Home Affordable Modification Program (HAMP) which helps distressed homeowners facing foreclosure.

Boehner also dismissed any proposal seeking to raise tax revenues.

“Let’s make it clear that the President got his tax hikes on Jan. 1st. The discussion about revenue in my view is over. It’s about taking on the spending problem here in Washington,” said Boehner. “The American people know that Washington has a spending problem.”

Boehner indicated that the House will take up another continuing resolution (CR) this week to fund the federal government past March 27th while Congress continues to figure out a way to replace the remaining sequester cuts.

Learn More:

• Office of Management and Budget: OMB Report to Congress on the Sequestration for Fiscal Year 2013 (PDF)
• WhiteHouse.gov: Sequestration Order for Fiscal Year 2013 (PDF)
• WhatTheFolly.com: Transcript: President Barack Obama’s remarks on sequestration after meeting with Congressional leaders on March 1, 2013
• WhatTheFolly.com: Transcript: House Speaker John Boehner’s remarks after the White House sequester meeting on March 1, 2013
• WhatTheFolly.com: Transcript: House Speaker John Boehner’s remarks on sequestration on Feb. 14, 2013
• Democrats.Budget.House.gov: FACT SHEET: The “Stop the Sequester Job Loss Now” Act
• Democrats.Budget.House.gov: Text of H.R. 699 “Stop the Sequester Job Loss Now” Act (PDF)
• Speaker.gov: Common Sense Solutions to Help End Waste, Fraud & Abuse of Taxpayer Money
• Speaker.gov: White House Clearly Not Happy About Being Held Accountable for Its Sequester
• WhatTheFolly.com: Excerpts from HHS Secretary Kathleen Sebelius’s letter on the impacts of sequestration
• WhatTheFolly.com: Excerpts from Secretary of Energy Steven Chu’s letter on the impacts of sequestration
• WhatTheFolly.com: Excerpts from Secretary of State John Kerry’s letter on the impacts of sequestration
• WhatTheFolly.com: Excerpts from Attorney General Eric Holder’s letter on the impacts of sequestration on the Department of Justice
• WhatTheFolly.com: Excerpt from EPA Administrator Lisa Jackson’s letter on the impacts of sequestration
• WhatTheFolly.com: Excerpts from Secretary of the Interior Ken Salazar’s letter on the impacts of sequestration
• WhatTheFolly.com: Sequestration will slow development of oil, gas & coal in the U.S.
• WhatTheFolly.com: Overview of NASA sequester cuts
• WhatTheFolly.com: FAA sequester cuts mean fewer flights, longer delays in upcoming summer travel season
• WhatTheFolly.com: Sequester cuts means 1,000 fewer science & technology research grants
• WhatTheFolly.com: FBI faces $550 million shortfall if sequester takes effect
• WhatTheFolly.com: Sequestration will cut unemployment benefits by 9%
• WhatTheFolly.com: Overview of Department of Labor sequester cuts
• WhatTheFolly.com: Social Security backlog will grow if sequestration forces furlough
• WhatTheFolly.com: Sequester cuts to NOAA will hurt fishing & shipping industries
• WhatTheFolly.com: Overview of Treasury Department sequester cuts
• WhatTheFolly.com: Sequestration will cut federal contracts & SBA loan subsidies for small businesses
• WhatTheFolly.com: Sequestration-induced furlough at the IRS will delay processing of tax returns
• WhatTheFolly.com: Overview of Department of Agriculture sequester cuts
• WhatTheFolly.com: Transcript: Testimony of Deputy Secretary of Defense Ashton Carter on the impacts of sequestration
• WhatTheFolly.com: Transcript: Testimony of Gen. Martin Dempsey on the impacts of sequestration
• WhatTheFolly.com: Transcript: Testimony of Gen. Raymond Odierno on the impacts of sequestration on the Army
• WhatTheFolly.com: Transcript: Testimony of Admiral Mark Ferguson on the impacts of sequestration on the Navy
• WhatTheFolly.com: Transcript: Testimony of Gen. James Amos on the impacts of sequestration on the Marines
• WhatTheFolly.com: Transcript: Testimony of Gen. Mark Welsh on the impacts of sequestration on the Air Force
• WhatTheFolly.com: Transcript: Testimony of Gen. Frank Grass on the impacts of sequestration on the National Guard
• WhatTheFolly.com: Meat and poultry industry will lose billions if sequestration takes effect on March 1st
• WhatTheFolly.com: Sequestration will cut food assistance to 600,000 low-income moms & children
• WhatTheFolly.com: Analysis: Sequestration will hamper border security & immigration enforcement
• WhatTheFolly.com: Education Secretary Arne Duncan calls sequestration “economically foolish and morally indefensible”
• WhatTheFolly.com: Sequester cuts to HUD could leave 200,000 low-income seniors, families, disabled & veterans homeless
• WhatTheFolly.com: Napolitano: Sequestration will increase wait times at airports & cruise terminals
• WhatTheFolly.com: Transcript: Deputy Secretary of Defense Ashton Carter’s testimony on the impacts of sequestration before the Senate Appropriations Committee
• WhatTheFolly.com: Transcript: Homeland Security Secretary Janet Napolitano’s testimony on impacts of sequestration before the Senate Appropriations Committee
• WhatTheFolly.com: Transcript: HUD Secretary Shaun Donovan’s testimony on impacts of sequestration before the Senate Appropriations Committee
• WhatTheFolly.com: Transcript: Secretary of Education Arne Duncan’s testimony on impacts of sequestration before the Senate Appropriations Committee
• WhatTheFolly.com: Transcript: OMB Controller Daniel Werfel’s testimony on impacts of sequestration before the Senate Appropriations Committee
• WhatTheFolly.com: 5 key facts about sequestration
• WhatTheFolly.com: Analysis: Impact of sequestration on non-defense discretionary spending
• WhatTheFolly.com: Transcript: President Barack Obama blames sequestration on GOP’s “partisan recklessness and ideological rigidity”
• WhatTheFolly.com: Transcript: Erskine Bowles calls sequestration “stupid, stupid, stupid” 
• WhatTheFolly.com: Transcript: Press briefing Q&A on impacts of sequestration on non-defense discretionary funding
• WhatTheFolly.com: Transcript: Press briefing remarks by Hunter Rawlings on the impacts of sequestration on federally-funded research & innovations
• WhatTheFolly.com: Transcript: Press briefing remarks by Peter McPherson on the impacts of sequestration on research at universities
• WhatTheFolly.com: Transcript: Northrop Grumman CEO Wes Bush’s remarks on the impacts of sequestration
• WhatTheFolly.com: Transcript: Press briefing remarks by Marion Blakey on the impacts of sequestration on the aerospace industries
• WhatTheFolly.com: Transcript: Press briefing remarks by Emily Holubowich of NDD United on the impacts of sequestration