After the Nightmare

Today is February 25, 2013 on March 1st, 2013 automatic cuts across the board will take place. You would think that politicians in Washington would come together get over their high horses and compromise. The optimism that I felt is now a realization that a compromise will not take place thereby making the cuts a reality. So what happens after the cuts take place ? according to CNNMoney.com

Scenario 1 – Shutdown threat pushes Congress to act: The current measure funding the government expires on March 27. Known as a continuing resolution, that law is separate from the one that mandates the automatic cuts. It sets spending levels and authorizes the government to continue operating.If lawmakers don’t agree to new funding levels soon, the government will shut down on March 28 and remain closed until Congress reaches a deal.A shutdown wouldn’t bode well for either party. Most government offices and services would be shuttered. The only exception: services deemed “essential” — those related to the safety of human life and protection of property. Taxpayer money would be wasted in the process because it costs money to close the government and to ramp it back up when Congress reaches a deal.The urgency to avert a shutdown might spur lawmakers to agree on a replacement of the automatic spending cuts as part of a final deal.

Scenario 2 – Lawmakers keep fighting over the cuts: The pressure to avoid a shutdown may be so great that Congress takes the threat off the table before it even addresses the spending cuts.One possibility is that House Republicans quickly pass a continuing resolution for six months until Sept. 30 at current funding levels, which would fall once the so-called sequester kicks in.Senate Democrats, not wanting to be seen as the ones risking a government shutdown, sign on and decide to fight for a replacement to the automatic cuts later.In that case, interest groups would step up pressure on lawmakers once the pain of the cuts really starts to set in.”The sequester is aslow bleed that gets worse as it goes on,” said Sean West, the U.S. policy director for the Eurasia Group.Indeed, its bite won’t be nearly as deep in March as it will be in April and beyond.For instance, while more than 2 million federal workers may face unpaid furloughs for a day or two a week, those furloughs likely wouldn’t start before April.And the White House budget office may be able to instruct some agencies to hold off on implementing cuts for a short period of time. “

Democrats need to understand that you can’t spent your way into prosperity and Republicans need to get that you can’t cut your way into it either. In order to balance the budget you need surgical cuts while increasing revenue one way or the other. uncertainty about spending and cutting is not good for our economy. My advice to you ?  balance your own budget, save money and get ready for a roller coaster.

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