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Why Sequester Hits Federal Agencies Unevenly

Some programs have wide latitude from Congress to shift funds and avoid furloughs, but many don't.

Trying to make sense of the sequester, those automatic spending cuts in federal programs designed to bring down the federal deficit over the course of a decade?

Here is the best judgment on key questions from the editorial staff of The Kiplinger Letter:

Do the cuts hit all agencies equally? No.

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Mostly discretionary spending is cut, by $85 billion for fiscal 2013, which ends Sept. 30. That's just 2.4% of the overall $3.55-trillion budget, but a bigger slice of the discretionary spending pie. Defense faces cuts of about 7.8%. Medicare loses 2%, but only on payouts to providers. Nondefense departments are trimmed 5%. So, too, are the White House and Congress.

A relatively few programs will escape the budget ax, including meat inspections, most programs for veterans, nutritional aid for children and food stamps. Most others get a haircut consisting of program cuts, furloughs for workers or, in many government agencies, both. Some workers will be off the job for a few days. Others will lose more than two weeks' salary. And some programs will not have to deal with furloughs at all.

Also on tap: Pay freezes for bureaucrats, except for automatic seniority increases for civil servants and raises tied to promotions.

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Can agency heads shift funds so that important functions are preserved? Some can -- those granted transfer authority by Congress to move funds. The list includes the Treasury Department, the Food and Drug Administration, the Coast Guard, the Securities and Exchange Commission, the Forest Service and the Commodity Futures Trading Commission. Also in this category are agencies under the Justice Department's umbrella, including the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives and federal prison guards. Instead of furloughs, those programs and agencies will use hiring freezes and reductions in training and travel to cut their budgets.

Other federal agencies don't have much flexibility. Members of the military will avoid furloughs, but most of the Pentagon's 800,000 civilian employees will be off the job for 14 days. The IRS will close for five days, three of them timed to create long holiday weekends.

Over time, nearly all who deal with the government will share the pain. You can expect delayed trials in the U.S. court system, maybe even for the suspect in the Boston Marathon bombings; longer waits for help from bureaucrats; and closed national parks and monuments for a short time over the summer. Business that contract with the government or supply everything from pens to planes will also feel a pinch because of sequester. And there'll be less federal money for farmers. Subsidies for owning cropland will shrink by about 8.5% this year.

The sequester program will disappear long before its 10-year life is over. Nearly every long-range program set up by one Congress is dismantled or substantially altered by future Congresses, and this one will not be an exception.

But that won't happen anytime soon. Look for some tweaks in terms of what is covered and what isn't, though any top-to-bottom overhaul will have to wait until after the 2014 elections.

Associate Editor Kenneth R. Bazinet contributed to this story.

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