The Sequester: Will It Finally Mark Some Move in Governing this Country?
Finally. This is our third attempt at an article discussing the
infamous government spending "sequester" for you. Our first two tries were basically
descriptive explanations of the size and design of what we thought would be
largely mechanical cutbacks in federal government spending obligations. But these cuts seem to have turned into a
political tool, and while we don't want to sound political in our discussions
here, we find it hard to avoid that.
More, there are new developments on this almost hourly, and some of them
seem to change the color of what's going on.
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The Mechanics of the Sequester
We still want to begin with a couple of nuts and bolts. The sequester was instituted in the midst of
the debt ceiling battle in the summer of 2011.
In renewing the government's legal borrowing authority, Congress was
requiring actions to reduce the deficit.
So it demanded a specified amount of spending cuts and the expiration of
the Bush-era tax cuts, effectively raising taxes. No one actually intended for these to take
effect in the blunt way they were enacted.
But during the run-up to the November 2012 election, neither was anyone
in particular in either party interested in doing anything meaningful toward
reducing spending or raising taxes. So
the New Year's Day 2013 deadline approached.
Just in the nick of time, as we explained to you on January 8, the tax
portion was dealt with, at least in part, but the nearly all of the spending
part was postponed to March 1. Still, no
meaningful work was done during January and February toward a reasoned package
of spending reductions. So the
proportional cuts took effect on the day of the deadline.
The $85.3 billion in cuts amount to about 6% of the
so-called discretionary portion of the budget, the portion subject to
sequester, or 2-1/2% of the entire $3.6 trillion budget. This is not a dramatic amount. By contrast, the January 1 payroll tax hike
is raising an estimated $95 billion this fiscal year, according to the
Congressional Research Service, and total revenue increases in the fiscal cliff
legislation are about $400 billion.[1]
Also, the sequester refers not to cash outlays, but to budget spending
authority. Some of that authority is
reflected in immediate cash outlays, such as employee wages, but some goes out
later, such as the payments for supplies and equipment that are ordered on the
basis of the budget authority. Some
estimates for the actual cash outflow during fiscal 2013 are about $43-44
billion, just over half the total amount of the budget authority sequester. One more caveat is that these
"cuts" reduce spending growth, but they do not effect an absolute
drop in spending this year from last year.
Recent Congressional Budget Office projections indicate that total
outlays will be $3.553 trillion this year, compared to fiscal 2012's $3.538
trillion.[2] Benefit and health programs
will continue to grow noticeably, more than offsetting the discretionary
"cuts".
Are the Cuts Mechanical – or Political?
The way the sequestration legislation is written, fixed
dollar amounts of spending restraints are assigned to departments and agencies
by a fixed percentage formula. On the
surface, this looked like a mechanical approach not requiring formal
policymaking, since it seemed that Congress and the Administration weren't
really making substantive policy decisions.
A listing of the allocations by department and program was published by
the Office of Management and Budget (OMB) on the night of March 1 when the cuts
began to take effect; the list is 70 pages long.[3]
Importantly though, and more significant than we first
understood, department and program directors can decide what specific resources
to cut. We had anticipated operational
and administrative matters like delaying the ordering of aircraft by, say, two months until October, or reducing
TSA agents' overtime. But we're starting
to hear about more visible and meaningful changes that in fact appear to
involve policymaking that is going on without the benefit of public discussion. Here are three:
1. Don't try to go to
the White House the next time you're in Washington and expect to have a
tour. In perhaps the most
straightforward "cut", these tours have been cancelled until further
notice. Several people have noted,
though, that the tours are given by volunteers or can even be self-guided;
apparently, the spending cut is coming through the reassignment of the security
officers who let people in. So the
American people cannot presently visit "the people's House". Even second-graders are upset. The total saving is said to be $18,000 a
week. Some private donors are already
offering to make up the difference.
2. More seriously,
the Department of Homeland Security has released some illegal immigrants who
had violated laws and were awaiting deportation hearings. We have seen press reports that more such
releases are planned. These immigrants
are not "free", but remain under DHS supervision, obviously a cheaper
method than holding them in custody.
Whether this method is prudent in the face of their alleged criminal
behavior seems to be another question altogether.
3. The aircraft
carrier Harry S. Truman has been held
in port in Newport News, Virginia, rather than getting deployed to the Persian
Gulf. Again, surely cheaper, but since
there is only one carrier in that region now, we can wonder if it's advisable
not to send the second one, given the level of violence there and the presence
of American troops.
Fox News also reports[4] that an email from an Agriculture
Department director to his staff, which they quote, alerts the staff that cuts
need to have the negative public impact that has already been described to
Congress. Senior department officials
denied that was the intention, but the impression is certainly there that the
cuts are being orchestrated, not just sliced mechanically.
Positive Movement? Perhaps.
As we began writing this "third try at an article about
the sequester", we feared that it would conclude with this politically oriented
complaint, and we were uncomfortable with that, for two reasons. First, we try to present factual information
that is as little slanted as possible, since our aim is to help you understand
the issues better so you can form your own judgments more thoughtfully. Second, we are genuinely concerned that the
Federal Government – the Congress and the Administration – are so focused on
politics at present that the underlying welfare of the country and our people
is being diluted as a rationale for discussion and action. It all seems to be about one-upmanship.
However, we have to say we are encouraged by the outreach
the President has been making to Republicans over the last couple of days. He's had dinner with a dozen Republican
Senators at a fine Washington restaurant and invited Representative Paul Ryan
to the White House for lunch.
Representative Ryan did not comment after his lunch, but several
Senators indicated that their meeting was obviously intended to begin some
dialogue and they thought this was constructive. The President is perhaps impressed with
various recent poll numbers showing that his support has eroded abruptly, with,
for example, the Gallup daily poll moving from a net approval rating of +13% to
zero in just over a week.[5]
So at present, we don't want to make too much of these
overtures at mutual conversation and we don't know how the government's
business will evolve going forward. But
there finally seems to be at least some reason to look for constructive
movements toward budget agreement that include policy decisions that are out in
the open and negotiated in good faith.
We can at least hope so, which is more than we had when we started
writing here.
_________________
[1]Jane Gravelle. "The
'Fiscal Cliff': Macroeconomic Consequences of Tax Increases and Spending Cuts". Washington, D.C.: Congressional Research
Service. January 9, 2013. Page 4.
Courtesy of the Federation of American Scientists website: http://www.fas.org/sgp/crs/misc/R42700.pdf.
[5] http://www.gallup.com/poll/113980/Gallup-Daily-Obama-Job-Approval.aspx
. Accessed March 7, 2013.
Labels: Government Policies
posted by Carol S. | 3/07/2013 11:21:00 PM
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