Sequestration is something that not everyone is entirely familiar with, but those who have been keeping a close eye on Washington have likely heard their fair share of the concept over the course of the past week. According to Bloomberg , automatic spending cuts went into effect on March 1st, half of which affect defense spending and the other half of which is spread throughout a number of federal agencies. The argument over whether or not budget cuts are actually good for the country can be taken in either direction.

Effects of the Sequester

Those in favor of sequestration state that America simply has no choice but to get out of debt, and that government cuts can help to expedite the process in ways that would otherwise be next to impossible. With these cuts, however, comes a potentially major hit to economic growth. In an estimate from the Congressional Budget Office , spending cuts are likely to reduce economic growth in America by 0. So what does this mean for the common American?

In a country where unemployment is already a problem that has made headlines for years now, the loss of this many jobs will likely have a greater effect than most people might realize when simply looking at sequestration at face value. Many of the programs that will experience budget cuts through sequestration are defense-related, although this is not the case across the board.

The FAA, for example, is expected to close nearly air-traffic control towers as a result of the cuts. Democrats, for example, have called for higher taxes on the wealthy, although Republicans have shot this down repeatedly, citing the tax hikes that already happened as a result of the fiscal cliff deal. If this had gone through, however, the increase in tax rates would have effectively replaced the need for major cuts in government spending. You'll Never Be On The Inside! So join Outsider Club today for FREE.

You'll learn how to take control of your finances, manage your own investments, and beat "the system" on your own terms. Become a member today, and get our latest free report: Grow Your Wealth in A Bear Market Epidemic". Both Republicans and Democrats are actively working towards keeping the government in strong working order throughout the rest of the fiscal year.

Stock Market Shrugs Off Sequestration Cuts For Now | Seeking Alpha

Voting has already begun on a bill introduced by House Republicans to keep spending cuts in place in the future and finance the U. The effect of these cuts would not likely be seen right from the start.

Since funds that are approved in a given year are usually reserved for future spending, the hits would likely not show a noticeable impact until and beyond. Needless to say, however, this sets the stage for a potentially rough hit to the economy in the latter half of the decade, which is just one reason why government officials have their sights set on finding the best possible solution to fixing the deficit.

Remember sequester? It's hurting the economy - Oct. 18,

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