The Sequester is the most recent government spending nightmare to receive its own title, and the nebulous nature of its reach has made most attempts at explaining it fall on befuddled ears. Complicating this issue more is the fact that most sources attempting an explanation also seem to agree that no one really knows exactly what they’re talking about. NBC comments, “You’d think that numbers would be more precise than adjectives, but there’s no agreement on the correct number to describe the size of the spending cuts required by the 2011 Budget Control Act.”
Most sources do seem to agree that the spending cuts will not be applied evenly across the board to every category of federal spending. Things like Medicare, welfare, interest payments on the debt and federal employee retirement benefits remain untouched, so the resulting cuts will be focused on what is called ‘discretionary spending.’ This includes things like research and some defense spending. The main question of concern to those in the housing and lending industry is how the industry will be affected.
U.S. Department of Housing and Urban Development (HUD) secretary Shaun Donovan says that these automatic spending cuts will have a devastating impact on the housing market. NBC’s Andrea Mitchell has said that the Sequester will reverse much of the improvement the housing market has made lately. Fears abound for underserved populations like the elderly, veterans and people receiving public assistance. HUD has real fears that they will be unable to provide foreclosure-preventing assistance and counseling to approximately 75,000 households. In a press release put out last September, the National Low Income Housing Coalition warned that sequestration would devastate low-income housing programs.
The effects of the Sequester will not all go into effect at once, but the next year will slowly reveal the true nature of our government’s inability to effectively budget itself. Watching market numbers will show the depth of sequestration’s effects, but the gravity and humanity of the situation will be seen on the faces of hurricane victims who will not be receiving the support that they need and the presence of veterans being homeless on the street. When the solution remains the closing of loopholes in our tax code, one wonders why congress doesn’t move more quickly to stave off such a large sense of impending fiscal doom.