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Sequester’s long-term effects still unclear

Senate Majority Leader Harry Reid Nevada (at the podium) held a news conference on the eve of the sequester with fellow Democrats Charles Schumer of New York (center) and Senate Majority Whip Richard Durbin of Illinois.

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Senate Majority Leader Harry Reid Nevada (at the podium) held a news conference on the eve of the sequester with fellow Democrats Charles Schumer of New York (center) and Senate Majority Whip Richard Durbin of Illinois.

WASHINGTON — The automatic budget cuts set to go into effect Friday could eventually be felt by the long-term unemployed, low-income families, and defense workers, but it won’t touch those receiving Medicaid and Social Security benefits.

And the president and members of Congress who failed to reach a deal to avert the so-called sequester won’t see their salaries cut, although some other federal workers will.

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Therein lies the paradox of the sequester: For some, the sky is falling. But for many others, the budget cuts will hardly register.

That may explain why legislative efforts to forestall the cuts this week were barely evident, despite dire warnings from President Obama and administration officials.

Democrats and Republicans did offer alternatives to the cuts in the Senate on Thursday. But neither had the needed 60 votes to break a filibuster. The Democrats’ proposal, replacing the across-the-board cuts with targeted reductions and closing tax loopholes for the wealthy, was defeated 51-49. The GOP’s legislation offered Obama greater flexibility in slashing the budget, but that plan was defeated 38-62, amid concerns among some about giving too much power to the White House over spending.

Obama is slated to meet at the White House with congressional leaders Friday — just hours after the deadline — in the hopes of making a retroactive deal. But the House is not in session Friday, and it is unclear when such a deal will be considered, much less passed.

The $85 billion in cuts this fiscal year could require hundreds of thousands of furloughs for government workers that, administration officials argue, will lead to less protection on the nation’s borders, longer wait times in airport security lines, and another hit to a still-sluggish economic recovery. During a speech Wednesday at Newport News Shipbuilding in Virginia, Obama said sequestration “will weaken America’s economic recovery. It will weaken our military readiness.”

“The longer these cuts are in place, the greater the damage,” Obama said.

But others — namely congressional Republicans — have decried what they characterize as scare tactics to put pressure on the GOP to act.

“If you’d listen to the administration, you’d assume that this is the last day that it’s safe to go outside,” Senator Roy Blunt of Missouri said in a floor speech Thursday.

Experts differ in their analyses of how severe of an impact the cuts will have. But administration officials say effects of the cuts — amounting to 8.2 percent of 2013 non-defense discretionary spending and 9.4 percent of defense spending — will be unavoidable over the coming months.

Most of the pain won’t be felt immediately. But experts and lawmakers agree that the cuts will have the greatest and most immediate impact on defense spending, which could have far-reaching implications for Massachusetts and the rest of New England.

The Pentagon said last week it had sent furlough notices to about 750,000 civilian workers, who could be forced to take unpaid leave for as many as 22 days this year. About 7,000 of those employees come from Massachusetts, according to the White House, and operations on Bay State military bases will be slashed $13 million this year.

“If the Defense Department has any way of steering these cuts, they’ll steer them away from troops in the field,” said Bill Frenzel, an economic scholar at the Brookings Institution. “That probably means less for contractors.”

Furlough notices are also going out to hundreds of thousands of federal employees at the same time as the salaries of Obama and Congress remain protected. The Federal Aviation Administration plans to furlough a majority of its 47,000 employees on a schedule of one to two days every two weeks through September, thus ameliorating some of the impact. The Department of Homeland Security plans a series of furloughs over the coming months for 5,000 border patrol agents.

The administration has said the reductions to budgets and personnel are detrimental to national security and other government services. Secretary of Education Arne Duncan said cuts could lead to teacher layoffs, and Transportation Secretary Ray LaHood warned of increased wait times for air travelers.

The effect “will be like a rolling ball. It’ll keep growing,” Homeland Security Secretary Janet Napolitano said this week at a White House press briefing.

The spending cuts will slow economic growth by up to a half-percent this year, the International Monetary Fund projects. And they will threaten 750,000 American jobs, according to the Congressional Budget Office.

Wall Street anticipation of the cuts seemed modest; the Dow Jones industrial average dropped 20.88 points Thursday, still near its record high.

As for the immediate effect on individuals, those receiving direct government aid will “see a real change,” said Joel Friedman, vice president for fiscal policy at the Center on Budget and Policy Priorities. Federal unemployment checks to 2 million long-term unemployed nationwide will drop by 11 percent, or an average of $132 a month, in late March or early April, the White House said.

About 100,000 low-income families nationwide are projected to lose housing vouchers, including nearly 4,000 in Massachusetts, according to the Center on Budget and Policy Priorities. The cuts will also reduce funding to state public housing and homeless assistance by about $14 million.

Medicaid and Social Security benefits won’t be touched by the cuts, while Medicare payments to health providers will drop 2 percent. Head Start, the federally funded early childhood education initiative, will also see budget cuts, leaving 1,100 Massachusetts children out of the program this year, according to the White House.

Some outside estimates, however, hold that cuts this year will be less than administration officials expect. The Congressional Budget Office projects that only $44 billion of the $85 billion in cuts slated for this year will go into effect, with the remainder made up in later years. Republicans on Capitol Hill argue that such a number, making up less than 4 percent of federal discretionary spending, is a manageable amount of government fat to cut.

Individual agencies will have some power to mitigate the impact, said Patrick Lester, fiscal policy director at the Center for Effective Government, a nonpartisan watchdog group. The difficulty for officials, he said, is mostly political, because the debate over the cuts will continue as the stopgap budget financing the government is slated expire on March 27.

Nevertheless, the economic impact of the cuts “will be real, but in some cases it will be difficult to see,” Lester said. He expects to start seeing the effects in April, adding that difficulty lies in accounting for future operations and funding.

“How do you miss what you didn’t know was going to happen?” he said. "People need to keep track of the dogs that aren’t barking.”

David Uberti can be reached at David.Uberti@globe.com.
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