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Federal budget cuts likely will hit gradually

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ST. PAUL -- Minnesotans may not know what the word means, but starting today they begin to feel the impact of automatic and deep federal budget cuts known as "sequestration."

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No one knows for sure how Minnesotans will be affected, but there is widespread agreement it will be felt.

U.S. Sen. Al Franken, D-Minn., was among those predicting long lines at airports, less thorough food processing plant inspections and some Head Start children being dropped from the program.

"It's not pretty and it doesn't make sense," Franken said.

As March marches on, however, the public will understand sequestration better and pressure politicians to fix the problem, U.S. Rep. Rick Nolan, D-Minn., said.

"My guess is that as the month proceeds and people realize the foolhardiness of this thing it will be brought before the House," Nolan said.

State Economist Tom Stinson on Thursday said that a sequester for the rest of the federal fiscal year could slow the state economy's growth from 2 percent to 1.5 percent. A two-month sequester would slow growth to 1.9 percent, he said.

Minnesota Gov. Mark Dayton said the sequestration issue is serious, but the immediate state budget effect "will be gradual."

State Senate Majority Leader Tom Bakk, DFL-Cook, said that while the impact on Minnesota is expected to be less than in other states, some areas still will be hit hard. For example, he said, the University of Minnesota will be out about $50 million in research funding if the federal cuts go through.

Minnesota House Minority Leader Kurt Daudt, R-Crown, said he was nervous, expecting a bigger impact from sequestration. But after seeing a new state budget report Thursday he said it likely will not play a major role in state budget discussions.

"Hopefully the Minnesota economy can weather it OK," he said.

Minnesota's economic consultant, Global Insights, predicts federal officials will allow the sequester to continue through March and April.

"There also is a deeper concern," a Global Insights report indicated. "Recently, the U.S. seems to be lurching from one potentially serious economic crisis to another, teetering on the brink of disaster again and again."

The federal inactions, or "political brinkmanship," has resulted in enough uncertainty that it has "slowed business investment and hiring," Global Insights reports.

"The sequester is a poor tool for budget policy ... but by itself it is not going to put the country into a recession," Stinson said.

That is little comfort for those who will be affected by the sequester.

"It's quite unimaginable that we would be here on the eve of the so-called sequester, but we wouldn't have a budget on the floor of the House to deal with that," Nolan said Thursday.

While the House did nothing about the sequester, representatives debated issues involving soapbox derbies and renaming a military base, Nolan said.

U.S. senators on Thursday rejected separate Democrat and Republican bills to deal with the sequester, making today's start of the cuts certain.

"There are going to be a lot of layoffs and a lot of reduced services for a lot of people," Nolan said. "This is a game changer. Over the next month we are going to see the consequences."

Franken said he is concerned about food inspection.

He predicted inspections will not be as thorough because some inspectors will be furloughed. "It is hard to say what could fall through."

Unlike some, the senator said he does not expect food shortages.

Since some farmers rely on federal payments, Stinson said that the agriculture sector could face sequester problems. But that might only come if budget cuts continue a few months, he said.

Franken agreed that some agriculture payments could slow and farmers would have less access to the Farm Service Agency programs.

Throughout the federal budget, the sequester would cut $1.2 trillion over the next decade, with $85 billion trimmed before Oct. 1.

Beyond sequestration, Congress and President Barack Obama need to deal with the federal budget later this month. Federal programs are operating on a budget extension that expires this month.

In the spring, they must consider whether to raise the debt limit the government is allowed to carry.

Sequestration was approved two years ago when Congress and Obama could not agree on how to control the federal debt. They agreed to the automatic budget cuts as a way to force political leaders find ways to avoid them.

Medicare and Social Security would not be affected by sequester cuts.

Obama and congressional leaders plan to resume talks today, seeking ways to end the sequester.

Danielle Killey contributed to this story.

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Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.
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