Alex Witt   |  April 14, 2013

How do the sequester's social services cuts affect the economy?

Economics and fiscal policy correspondent for the National Journal, Nancy Cook, joins Alex to break down the effects of sequestration and the current state of the economy.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> alex witt . it's now been 44 days since the sequester took place. from cancer clinics turning away medicaid patients. joining us now is nancy cook , correspondent for the national journal . what sort of impact to social security cuts like food banks and the head start programs have on the economy overall?

>> they have an affect on the economy, it's a fiscal drag , it's a time when the unemployment rate still remains high, the housing industry is -- the economy is really struggling to get momentum and anything like spending cuts for instance really creates a fiscal cldrag that drags down the economy.

>> the administration is spending -- those numbers really don't add up there. but the cuts to the social services , they're obviously going to affect lower income people more. but then you have the furloughs for the government contractors. are all the classes being hit equally or not?

>> yeah, they certainly are. the thing is that the sequester exempts very low income people. it's not going to affect things like health insurance for children, veteran's programs, or food stamps , there are some protections built in. there are some affects for those in the working class , we're not going to see them until august, but it will come in the form of reduced unemployment checks and it also come in the place of civilian furloughs that will take effect this month.

>> only 88,000 new jobs in march. and though unemployment did faulfall technically speak.1%, that's just people leaving the workforce, so is this the beginning of a trend?

>> certainly, and it's not necessarily the sequester that's causing it at this point. kplis economists attribute it to the payroll tax endinging at the first of the year. and that's causing some slippage in things like retail jobs. but it certainly is a really worrisome trend that people are dropping out of the labor force all together and that the people participating in the labor force , we haven't seen that number this low since 1979 . which is pretty remarkable.

>> nancy cook , thank you.