All we've heard lately (well, except for the Harlem Shake), is talk of "Sequestration". Do you know what it's all about? Pull up a chair and get a Red Bull, kids, and I'll tell you. First, a couple of definitions:
The term came into being many, many years ago (back in the 15th Century, according to Mirriam-Webster.com). Before our clown-like Congress (did I just write that out loud!?!) started using the term in conjunction with our budget deficit woes, I always thought of Juries being sequestered during a big Charles Manson-like trial (lasted from July 24, 1970 to April 19,1971, (An account of the Charles Manson Trial)).
BUT I DIGRESS
Now, well, since 1985's Gram-Rudman-Hollings Deficit Reduction Act, Sequestration is the term used to describe automatic spending cuts that are (supposed to be) "across the board" cuts. The reasoning was that instead of the deficit being just a number left over after the budgeting process was complete, it became an amount agreed upon by Congress and the President. If the total budget deficit exceeds that authorized by the Budget Resolution, then funds are to be held by the Treasury. In this budget cycle, cuts of 2.4% have to be made.
The funds withheld are from discretionary, not mandatory spending, meaning "Entitlements" such as Social Security, are not touched (interestingly, since Congressional salaries come from the mandated spending side of the ledger, I presume they won't be affected)
The same 2.4% of the total budget has to be withheld under the Sequestration rules (the word is stupid, IMO). This comes to about $85 billion.
Where does the $85 Billion come from then, you ask? Here is a handy dandy discussion of where the cuts will come from (summary: Education, Defense, Public Health and Social Programs) : http://www.cbsnews.com/8301-250_162-57571199/where-will-the-sequester-cuts-hit-your-community/
It is a true statement that the biggest spending programs (Social Security and Medicare) are not included in these cuts - this is where a lot of the arguing is coming from.
Note: Social Security, Medicare, Medicaid, and CHIP equal about 41% of our total budget (in 2011) - again, this is not part of the Sequestration. Defense, at 20% of the budget, is part of the Sequestration.
OK. 'Nuff said. If you've hung with me this long, you are probably bored, so here is a link to some hilarious accounting jokes: Just for Fun.