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Can we live with the budget 'sequester'? Yes, but it’s better if we don’t.

Congress has many incentives to prevent the $100 billion 'sequester', the feared 'fiscal cliff' among them. But it’s main drawback is that it’s a blunt tool for a delicate budgetary task.

By Staff writer / November 2, 2012

Jetliners sit on the tarmac at Chicago's O'Hare International Airport in this 2005 photo. Air-traffic control is one of the many government services that could face cuts of roughly 8 percent as a result the 2011 Budget Control Act.

Nam Y. Huh/AP/File

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How bad would it be if the federal government had to suddenly lop $100 billion off its budget next year, with cuts of 8 or 9 percent in just about every discretionary program?

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The question isn't just hypothetical.

This is what is scheduled to occur come January, as a result of the 2011 Budget Control Act – a law designed to nudge Congress toward fiscal responsibility by creating a situation that neither Democrats nor Republicans like.

Sure enough, both sides disparage the idea of "sequestration," as the automatic spending cuts are called. But they haven't yet found a compromise to avoid the event. So either a full-court press by policymakers after Election Day will yield an alternative fiscal plan, or the cuts may happen.

"If you'd asked me three or four months ago, I'd say no chance" that the cuts would take effect, says Rudolph Penner, a former director of the Congressional Budget Office now with the Urban Institute. "I don't say that any more."

The threat has grown more real, even as both sides have sounded dire warnings.

The Obama administration has predicted a "reduction in readiness" for the military, and on the budget's nondefense side, it says "sequestration would undermine investments vital to economic growth, threaten the safety and security of the American people, and cause severe harm to programs that benefit the middle-class, seniors, and children."

Conservatives, for their part, have been sounding equally vivid alarms, focused squarely on the defense side of the budget.

"These cuts would leave the U.S. with its smallest Army since World War II, its smallest Navy since World War I, and its smallest Air Force ever – and this at a time when the world is not growing safer but more dangerous every day," policy analysts Emily Goff and Steven Bucci wrote this month in a Heritage Foundation report.

A more nuanced reality

Yes, the threatened cuts are serious, but the reality may be more nuanced than the partisan sound bites suggest.

Before diving into details, it's important to keep some context in mind.

The potential spending cuts are important for two reasons. The first is simple pragmatism: Decision time is coming quickly, and this is an issue that could affect everything from stock market prices to whether government contractors eliminate thousands of jobs.

The second has to do with politics: The debate over the automatic cuts parallels the presidential election duel over fiscal visions between President Obama and Mitt Romney.

Mr. Romney isn't stumping for the sequester, but his approach to federal spending has important parallels to it. Mr. Obama's approach does not.

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