The chart is an illustration comparing expected spending over the years 2013 through 2022 of about $47 Trillion and threatened sequester cuts, over that same period of time, of $1.2T or about 2.5% of the total. Granted, some of the spending, Social Security and veterans' benefits, for example, is off limits for sequester cuts, but that restriction was agreed to by all parties involved. That requirement could be changed anytime. As a matter of fact, the whole sequester agreement, even if it goes into effect, can still be changed anytime.
Even with those areas off limits, cuts of the size proposed will be a problem only if the administration chooses to make the cuts in more critical and more visible budget items rather than in less critical items. It seems that the president is now threatening to do the former in order to goad congress into action, but I suspect that, if the cuts have to be made, they will be made in the least critical areas. Nobody is suggesting that the president is not a very smart guy, but he is a tough negotiator.
The projected spending tabulation from www.whitehouse.gov is presented below also. Note that large deficits continue annually, the debt is projected to approach $20T, and the GDP growth projections are pretty bullish at around 4% per year. The impact of the proposed sequester cuts on the projected deficits and debt would be trivial. I understand that the government is operating without an approved budget in place, but this was the White House proposal.
Let's try the sequester out and see how it works. Then we will know for sure whether or not it was a good idea.