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Harsher cuts are on their way

Winter is coming, and ongoing budget cuts mean that poor families across the country will have less money to heat their homes.
Mac Baker poses with her niece in her unheated apartment in the Ocean Bay public housing projects, Nov. 9, 2012.
Mac Baker poses with her niece in her unheated apartment in the Ocean Bay public housing projects, Nov. 9, 2012.

Winter is coming, and sequestration's automatic budget cuts mean that poor families across the country will have less money to heat their homes. 

Last week, the government gave out 10% less to states for the Low Income Home Energy Assistance Program, as compared to the previous year—a decrease that's partly due to looming sequestration cuts in 2014. For Maine, whose funding got cut 3%, that means families are receiving $129 less in heating aid just as the temperature has started to drop.

"That doesn't buy enough heat to get through the winter," said Deborah Turcotte, a spokeswoman for MaineHousing, which is already fielding calls as the windchill plunged to the 20s this week. "The only thing you can tell them is to close off the rest of the house and stay in one room."

It's a reminder that the worst is yet to come for many programs if the across-the-board cuts continue, as agencies run out of stopgap measures that have kept them afloat for the last year and more reductions make themselves felt. Unless Congress reverses the cuts, defense discretionary spending will be cut by an estimated $19 billion in 2014 and non-defense spending will be cut $12 billion more, according Michael Linden, managing director for economic policy at the Center for American Progress.

That's on top of the cuts that have already occurred since March, when sequestration began. The reductions shrank defense spending by $9 billion this year, and non-defense spending by $36 billion, as compared to 2012. (The estimates exclude wartime and mandatory spending, both of which are subject to some automatic cuts.)

The cumulative impact of sequestration has been difficult to evaluate given the rolling, uneven nature of the cuts and the arcane nature of federal budgeting.

Under current law, sequestration means a $110 billion cut in budget authority every year until 2021—a spending cap that limits the amount of money the government can commit to spending. That's usually the way that the size of the cuts are described. And on paper, the government will be operating under the same constraints for non-defense spending in 2014 if sequestration continues, as its spending cap doesn't change. 

But on the ground, that doesn't mean keeping the status quo. There will less money flowing out of the Treasury to domestic programs in 2014, as more scheduled cuts actually take effect, and they will last the entire year instead of 10 months. Next year's $12 billion reduction in domestic outlays—the immediate government spending that affects people's lives—will make the pain worse. And defense programs will take an even bigger hit as brand-new cuts take effect in January. 

"In terms of actual dollars being spent, the effect on real people and programs is bigger," says Linden. "It was always going to be the case that the sequester was going to get worse."

Government agencies will also have a harder time managing the spending restrictions that have already taken effect in 2013 if sequestration continues. From the Justice Department and the Pentagon to local housing authorities, officials have used temporary, one-time measures to mitigate the pain of sequestration this year. If sequestration continues, however, they won't have the same creative budgeting and accounting tricks at their disposal. And that means the cuts will deal a harsh blow to more American families and businesses across the country. 

"Oil prices aren't going down and the winters aren't getting any shorter, but now families are going to have to try and make do with even less," says Rep. Chellie Pingree, a Maine Democrat, of the cuts to low-income heating assistance. "These cuts are going to have a real impact on people who are really having a hard time making ends meet."

In Boston, sequestration means 500 poor families may have their housing subsidies cut next year, says Lydia Argo, a spokeswoman for the Boston Housing Authority. Through 2013, Boston Housing Authority has managed to stave off major cuts to Section 8 participants by relying on its reserve fund. But it now estimates those reserves will be depleted by the end of December. "We believe it is inevitable that we will have to cut subsidies to families currently participating in the program sometime next year," says Argo.

That means hundreds of Boston families will face a greater risk of being evicted or becoming homeless, she says. The average income for families in the program is only about $16,700 per year, with nearly half of the households headed by someone who is elderly and/or disabled. Nationwide, at least 125,000 Section 8 housing vouchers are expected to be cut entirely if sequestration continues through 2014, according to the Center on Budget and Policy Priorities.

Ongoing cuts would mean more painful choices across the rest of the government as well. The Federal Aviation Administration avoided furloughing air-traffic controllers this year by redirecting construction funds, but it won't be able to use the same trick next year if sequestration continues. Both the Pentagon and the FBI may have to lay off thousands of civilian employees in 2014 if the cuts continue.

It's a big reason that undoing sequestration remains Democrats's biggest priority in the current budget talks. "Sequestration is already having serious, harmful effects on our national security and on families and communities across the country, and it will only get worse," Sen. Patty Murray, the chief Democratic negotiator, told msnbc.

But there's still resistance among congressional Republicans to changing sequestration at all, making it harder for Democrats to undo the cuts. At Wednesday's budget conference meeting, Sen. Chuck Grassley lauded the automatic cuts and discouraged his colleagues from undoing them. "Sequestration is working," he said. "Compromising on sequester for more money for the military I think is short-sighted."