The sequester that everyone is talking about is not directly related to the normal use and meaning of the word. Usually, "sequester" means to isolate or hide away. For example a jury in a trial with a lot of media attention is sometimes sequestered in a hotel or another isolated area so they don't learn information about the case from the TV, newspaper, or their family. Here's a quick history of the sequester in American politics today. As you probably know, the U.S. is in debt. The government spends more money on the military, health care programs, etc. than it receives in taxes. Both political parties want to reduce the debt but completely disagree about how to do it. In late 2011, the U.S. Congress passed a very unusual law in which they were given a deadline to make a deal on the budget. If they didn't make a deal by the deadline, the law would automatically make very drastic and painful cuts to the U.S. military and also to health care programs. These painful cuts are the called "the sequester." The reason why it's in the news is that the sequester budget cuts are going to happen on Friday unless the Congress changes its own law or finds a different way to reduce the country's debt. People in the US are worried about this issue because as you know the U.S. spends a very very large amount of money on its military. Of course there are many people outside the U.S. (and many Americans as well) who believe that the U.S. spends too much money on the military anyway. However, it's also true that this money creates jobs in companies that produce equipment for the army, so the sequester will hurt our economy. Finally, I just want to emphasize that both political parties are responsible for the sequester. It is not simply "an effort by Obama," as Rafael said. The law was approved by both parties and they are both responsible for whatever happens next.

"Sequester" in law - a prohibition or restriction imposed by governmental authorities on the use or disposal of any property. The economy - reducing the state budget expenditures. In medicine - gangrenous area of ​​bone. In gardening - pruning.

I've never heard this term in Canada, and I'm just an hour's drive away from the U.S. You'll find a detailed explanation right here. http://uspolitics.about.com/od/thefederalbudget/a/What-Is-Sequestration.htm

The sequester that it's referring to here is what is what the news outlets have been calling the sequester. It was an effort by Obama to sequester (or set aside) certain line items in the budget for automatic cuts if a compromise on the budget was not received. They would go into effect immediately if a compromise was not reached by a certain date. These items included military spending and what they called discretionary spending which is another way of saying optional spending or costs that are not considered mandatory. The deadline came and went and the mandatory cuts have been put into effect.

Yeah, it's not used here at all. It means isolate or hide away. Or, as you say, used in American media to mean budget cuts, In Britain we use the word austerity. I'm afraid I'm unable to help you with the meaning in the passage, as it's not commonly used here. Although I think it's to do with the reduction in funding for research. Hope I helped a little.