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Sequester to hit family budgets?

By Claes Bell · Bankrate.com
Friday, March 1, 2013
Posted: 5 pm ET

It may take a while for the vast majority to notice something is amiss with the federal government. But for some families, the impact on their household budgets could be severe, according to White House officials.

Two bills were considered in Congress this week to prevent the sequester, automatic across-the-board budget cuts brought on by a failure to reach an agreement on reducing the deficit. Those bills ultimately failed to garner the necessary votes, so as of Friday, government agencies began enforcing spending cuts under the policy.

"It will affect different families differently, and not everyone will know the thing that affected their budget was the sequester," says Jason Furman, principal deputy director of the National Economic Council. "When you pull $85 billion out of the economy in a seven-month period of time, you get slower economic growth and less job creation."

Here are some of the groups that the White House says will be affected, according to Furman.

  • Federal workers: If you work for the federal government, you may be getting a furlough notice that will mean fewer hours and ultimately, less income.
  • Parents with school-aged children: Funding cuts may hit programs for young children such as Head Start, which provides educational and nutrition assistance. Parents of special-needs children also may see programs serving their kids in public schools cut.
  • College students: Some students may see their work-study programs reduced or eliminated.
  • Employees at federal contractors: Some federal contracts may be delayed or canceled, forcing layoffs.
  • The unemployed: Recipients of emergency unemployment compensation benefits could see their checks cut, Furman says.
  • Recipients of housing aid: The budget for all federal housing programs will be affected, Furman says.

White House officials have also said that tax refunds could be delayed as well.

What do you think? Are you ready for the effects of the sequester?

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