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Opinion: Sequester can’t be pushed under the rug

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When Walmart, the world’s largest retailer, starts making adjustments because of the sequester, maybe it actually is something that people should be concerned about and be paying attention to. Only one in four Americans say they are closely following the news surrounding the sequester, and less than one in five say they understand what would happen if it takes effect. But on an issue that could dramatically affect half of the population, you need to know about it.

The sequester (which simply means a cut in federal spending) is a large remnant of the deal that diverted the fiscal cliff issue from last month. Unless Congress and the White House can reach an agreement by the end of the month (Do they ever?), major budget cuts will be imposed.

The first part of the fiscal cliff was the expiration of the payroll tax cuts imposed by the Bush Administration to allow middle and lower income Americans to increase their spending in hopes they’ll stimulate the economy. Retailers are afraid that with the tax cuts expiring, consumers will spend less money. A recent National Retail Federation (NRF) survey reported that 46 percent of consumers plan to spend less as a result of the payroll tax increase.

While two percent may seem like a small increase, this means that an employee making $50,000 a year will pay $83 more in taxes each month, or $996 more each year. With 153.6 million people in the labor force, that’s nearly $153 billion less that consumers will have to spend on groceries and luxury items. Combined with increasing gas prices (up 50 cents in the past month) and stagnant wages, consumerism could be heavily influenced.

Lower-income households will be affected the most heavily, especially those living paycheck to paycheck. The payroll tax is regressive, meaning it only applies to the first $113,000 of income. This is why you’ll see stores geared toward lower-income families adjusting their inventory toward lower-priced items, such as dollar stores, discount stores, and yes, even Walmart. The superstore has already begun to stock their shelves with cheaper products and smaller packages of bulk items, according to a recent article in The Wall Street Journal. Additionally, McDonald’s is promoting its Dollar Menu, Burger King changed the price of the Whopper Jr. from $2 to $1.29 and Tyson Foods is using lower-priced cuts of meat.

The second part of the sequester is lowering the debt ceiling by imposing cuts in federal spending. What Washington wants you to think is that these will all be cuts in discretionary spending: WRONG. While, yes, MOST cuts will affect discretionary spending, not all will. Some mandatory programs, including Medicare and the unemployment trust fund, will be affected. Some low-income programs, like aid for Women, Infants, and Children (WIC) and the Low Income Home Energy Assistance Program (LIHEAP), could see cuts.

The nearly four million Americans that receive unemployment checks will see their benefits cut by 9.4 percent, meaning about a $400 cut between March and September. Another four million Americans who are housebound or disabled will suffer because of cuts to the Meals on Wheels program. The Meals on Wheels Association of America predicts that 36,000 fewer meals will be delivered in Erie County, New York alone.

To put all of this simply, any American who is not middle or upper class is going to be even worse off. Unfortunately, that means half of the U.S. population. The sequester is not an issue to be pushed under a rug or averted for another number of months. This will affect nearly 160 million Americans. Congress and the president need to keep this in mind and reach a compromise.

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