What Would Happen If You Sequestered Yourself?

Photograph by Jerry Cooke

It’s Sequestration Day! A day when pundits and news anchors are outdoing each other freaking out about the $1.2 trillion in automatic spending cuts that Congress refused to undo or delay. It could wreck the military! It could wreck the economy! It’s terrible!

Actually, it’s not terrible. Stupid, yes. But not terrible. What’s sorely missing from most of the news coverage is perspective. The $1.2 trillion is the amount of spending removed from the economy only if the full sequestration is allowed to take effect over 10 years. Most pundits are claiming that $85 billion will vanish this year alone, but even this is misleading. Only about $42 billion slated to be spent this year will disappear if Congress doesn’t act.

For my money, a great way to get a little perspective on the scope of these cuts is to understand how they would apply to your own family. Happily, Miguel Garrido, a quantitative analyst for Bloomberg Government, has produced just such a study. (Here at Bloomberg we keep teams of quants chained in the basement, like slave oarsmen in a Viking ship.)

Garrido took a look at what would happen if a 5 percent sequester were applied to the average U.S. family, which earns $63,685 before taxes. To approximate the conditions of the actual sequester, the cuts were applied uniformly across all categories of family spending. The Pentagon can’t satisfy the sequester just by (sensibly) killing off the F-35 Joint Strike Fighter, and your family can’t wriggle out of it simply by canceling “date night” and the Sunday newspaper.

What would it feel like to get sequestered? Well, it wouldn’t be great. But it wouldn’t be that bad, either. It would cut your family’s spending power by $2,485 a year. Most families think about expenses in a month-to-month sense, though, and Garrido’s study (subscription required) broke them out this way too:

As the chart shows, you’d have to cut back on food by $27 a month. That’s not even a date night. More like lunch at Arby’s. Your transportation budget would fall by $35 a month, or about two-thirds of a tank of gas (in my car). So you might have to ride the bus or walk. Vigorous walking might improve your health, which would be useful since your monthly health-care budget will fall by $14. But don’t dare splurge on fancy new sneakers. Your entertainment and apparel spending must drop by $18.

Hardest to figure out is how you’ll subtract $70 a month from your housing budget. If you rent, maybe you can move to a fractionally smaller apartment. If you own your home, well, I have no idea what you’ll do. Sequestration is a headache for everybody. Just ask the guys at the Pentagon.

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