Commentary Provided by J.J. Schenkelberg, CLS Sr. Portfolio Manager
Today is March 1, 2013. In case you haven’t heard today is the day sequestration occurs and major budget cuts are to be set in motion. The market seemed to care for maybe a milli-second. Beyond that, could investors and the U.S. public be coming immune to political bantering? Was the fiscal bluff non-event enough to immunize those political critics who have been losing sleep for the past two years because our government “stinks”? As much as lower volatility has been somewhat comforting, the immunity to these events is very interesting. Kind of like when the kids are in another room together and everything gets quiet. . . is something up??
Well, we’ll find out soon enough what investors think of these impending budget cuts.
For today, here is a review of what the sequestration means, as laid out by Jacquie Kenyon from LearnVest. These cuts are designed to occur over the next nine years, except where noted otherwise:
• Total amount of future budget cuts: $1.2 trillion
• Cuts to the budget for fiscal year 2013: $85.4 billion
• Cuts to the Department of Education budget: $2.8 billion
• Cuts to the Federal Aviation Administration: $600 million
• Cuts to the Department of Defense: $42.7 billion (7.9% of its budget)
• Cuts to Medicare: $9.9 billion (2% of its budget)
• Cuts to the National Institutes of Health: $1.6 billion
• Cuts to the Centers for Disease Control and Prevention: $323 million
• Number of low-income women and children who will no longer receive WIC (The Special Supplemental Nutrition Program for Women, Infants and Children) benefits: 600,000
• Cuts to FEMA’s disaster relief budget: $375 million
• Number of the country’s 561 wildlife refuges that will close: 128
• Number of wildlife refuges that will still have visitor services: 0