The Real Sequester Deadline Is Not Actually March 1

On March 1, automatic spending cuts that will affect every department and every agency will go into affect, lopping off about $85 billion in spending from this fiscal year.

And though people are freaking out (especially the defence industry) there’s virtually no progress taking place. People think there’s no chance that the sequester, as the cuts are called, will be avoided.

But there might be more time than people realise.

March 1 is not a hard deadline like a debt ceiling or a government shutdown.

In a note this morning, Nomura explains why people are kind of calm. The expectation of insiders and lobbyists is that the issue will be dealt with in March sometime.

As both sides try to best their opponent’s creative interpretations of the words “credible” and “plan,” our economists note that while they do not expect an agreement to alter the automatic cuts before March, they “do expect the cuts to be modified before the end of March”. Representatives of the defence industry appear to agree, with the Hill reporting that industry groups have given up a more than 18-month campaign to prevent the cuts to focus on getting them reversed as soon as possible. Markets appeared to take little note of the noise, leaving one to wonder whether contentious negotiations will resume with the aim of resolving the sequestration ahead of expectations or if this is part of broader positioning ahead of the budget negotiations.

In a tweet last night, POLITICO’s Ben White pointed out the real deadline, when the government is set to shutdown, a la 1995.


Photo: Ben White, Twitter

At that point, if there’s still no deal on anything, then maybe start to freak out.

But if you do want to freak out a little, here’s how much the actual sequester would cost:

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