President Obama did a pretty solid job outlining sequestration during his annual State of the Union address to Congress.
In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year. These sudden, harsh, arbitrary cuts would jeopardize our military readiness. They’d devastate priorities like education, and energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs. That’s why Democrats, Republicans, business leaders, and economists have already said that these cuts, known here in Washington as the sequester, are a really bad idea.
After a delay tactic in late December delayed the date by two months, March 1st marks an $85-billion across-the-board cut in federal spending—the first step in a mandatory $1.2 trillion reduction over 10 years. To avoid these mandatory cuts, a compromise must be reached. Democrats want to bridge the gap by increasing government revenue (re: raising taxes). Republicans hate that idea and instead want to see serious spending cuts.
In the meantime, what was once considered too onerous to be implemented now seems unavoidable. How would sequestration affect life sciences industry?
It’s not a question we can answer wholly as there is a gag order on all federal agencies prohibiting discussion of how the cuts would be applied. However, with an issue this big, people are hypothesizing. The sequestration, by definition, covers almost every federal agency and every research program. Last September, the Office of Management and Budget estimated that agencies such as the FDA and National Institutes of Health (NIH) would suffer a 5-8% budget reduction in 2013.
And the whole thing is set to unravel be enacted at the end of next week, March 1st. Hold on to your hats.
