Sequestration Averted - For Now
January 2, 2013
The Last-Minute Deal
Following a last-minute deal to avert the "fiscal cliff," sequestration is off the Washington agenda, at least for a while. But as March approaches, discretionary spending will come under increasing scrutiny. Therefore, it will be important for physicists to emphasize the historic role science and technology have played in spurring economic growth.
The path to deficit reduction, which polls have shown the public supports, ultimately lies in growing the economy. And as the Simpson-Bowles Commission noted, federal investments in science and education are essential for achieving that goal.
Spending Cuts Delayed Until March
In striking the deal that averted major tax increases for most Americans, the White House and Congress agreed late in the evening on New Year's Day to delay action on across-the-board spending cuts for two months. When they address the issue at the beginning of March, policymakers will also have to decide whether and how to replace the Continuing Resolution, under which the government has been operating since last Oct. 1. And Congress will have to vote to raise the debt ceiling, which the United States needs to meet its debt and operating obligations. House Republicans have threatened to hold the debt ceiling hostage, pending an agreement on major spending reductions. In response, the White House has said it will not negotiate.
March Madness for Budgets
The projected March madness might be akin to the triple witching hour on Wall Street, which occurs four times a year when the contracts for stock index futures, stock index options and stock options all expire at the same time. The result is usually market volatility and occasionally investment chaos. Science funding could be in for a wild ride.
If the recent fiscal cliffhanger has any messages for Washington watchers, it is these.
- First, ideological polarization will likely make cutting any deals extremely difficult until the last minute.
- Second, increased revenues from higher tax rates, having been incorporated into the January 1 legislation, will not be part of the near-term debate.
- Third, reductions in entitlement spending will be difficult to achieve, at least for now, given significant Democratic opposition.
- Lastly and most importantly, physicists must be ready with the message that science and technology have paid huge economic dividends for our nation, providing the foundation for innovation, new industries and jobs for Americans.