Skip to main content


Submitted on

After poring through numbers, documents and data on the sequestration to share with our GP Investors, I realized how insignificant it seemed. What are the actual numbers?

  • In 2011, the federal budget was $3.630 trillion.
  • The 2013 budget is $3.803 trillion – an increase of or $173 billion (about 4.6%)
  • The federal budget is expected to grow 5% a year from 2012 – 2022. (OMB)
  • The sequester that was just enacted is an $85.4 billion cut, or 2.25% cut in overall government spending. However, this cut does not apply to all aspects of federal spending. It is split nearly equally between defense and non-defense discretionary spending, which each are expected to be $42.7 billion.

To put this into perspective:

Defense and security spending make up about 24% of the total budget – or $913 billion – for 2013. This includes veteran’s affairs and homeland security. Therefore, defense spending is effectively being cut by 4.7%. It’s worth noting that the United States accounted for 41% of the world’s military spending in 2012. The next largest military spender is China, which accounted for 8.7%.

Non-defense discretionary spending is approximately 20% of the total budget – or $761 billion. The sequester cuts this budget by 5.6%.

The sequester was adjusted for prior cuts and for a 10-month year. If it continues, the cuts will be $109 billion per year from 2014 – 2021. But, here is the funny accounting that only occurs inside the Beltway; this is a stabilized one time cut of $109 billion that is simply carried through each year for 10 years, and counts as a cut of over $1 trillion.

Meanwhile, OMB projects that the Federal Budget will grow 5% per year during that same period. This includes annual increases to defense spending by 1.8% and non-defense discretionary by 1.6%. While estimates vary greatly on the impact for jobs, the GDP, and  each State, the anecdotal evidence may be more telling. Federal government employees cannot be fired or have their pay reduced, so many are being furloughed without pay for a period of time.

Agencies already are not refilling vacancies that occur when employees retire or leave.  These furloughs are considered job loss, even though many of the furloughs are just two weeks. If that seems harsh, it should be noted that in the past when Federal government workers were furloughed, they were reimbursed later for the pay loss.   That’s right, they were compensated for not working to save money.  The job loss impact probably will be felt more acutely by government contractors, which are private sector companies.

Apocalyptic hysteria abounds about the sequester; yet, it’s a barely-felt speed bump in the economy compared to the multi-trillion dollar private-sector wreck that occurred in 2008-2009.