Left in place, the $85 billion in automatic federal
spending cuts that went into effect on March 1 - a.k.a. "the
sequester" - will set criminals free, delay flights, lock kids out of day
care and send thousands of teachers and police to the unemployment line. Or
perhaps those reductions will have minimal impact, and are a long-overdue first
step in tackling the nation's $16 trillion budget deficit that will actually
spur economic growth.
Which of these scenarios you believe may depend on your political leanings.
Both could have elements of the truth, or maybe just what comedian Stephen
Colbert famously dubbed "truthiness" - the overwhelming belief that
"What I say is right, and [nothing] anyone else says could possibly be
true."
Truthiness has unfortunately dominated the sequestration debate, much as it
dominated the "fiscal cliff" discussion that preceded it at the
beginning of the year. And while passionate pontification from opposing ends of
the political spectrum may appeal to the most devoutly partisan among us, it
has done nothing to move the White House and Congress toward a solution that
avoids sequestration's worst case scenarios.
Neither political party has been above the fray: The White House has been in
full campaign mode, with President Obama spending copious time and energy
lobbying the public to lean on their Congressional representatives to devise a
plan to avoid the cuts. To wit, his administration released a state-by-state
breakdown that showed devastating job losses and threats to public health and
safety. He shared the same message with the nation's governors last weekend at
the winter meeting of the National Governors Association in Washington D.C. The
president acknowledged that the worst of the impacts "will not all be felt
on day one," but insisted they would surely come.
Republicans, meanwhile, scoff at it all, essentially trivializing the cuts and
accusing the president of, as Rep. Jon Cornyn (R-Texas) told Fox News, of
dramatizing the impact of the sequester "to scare people in order to grow
the size of government."
While this is all so much of what has become business as usual in Washington,
the "new normal" so to speak, the sequester is nowhere near as cut
and dry.
When folks woke up this morning, virtually none of the worst case scenarios -
delayed flights, kids being kicked out of government-run day care, cops and
teachers being cut loose - had come to be. Nor will they come tomorrow, or the
next day or the day after that. In fact, over 80 percent of federal aid to
states is exempt from sequester cuts. As the National Association of State
Budget Officers (NASBO) notes, Medicaid, the Supplemental Nutrition Assistance
Program (SNAP) and Temporary Assistance for Needy Families (TANF) are in fact
all exempt from the sequester.
Public agencies and private companies that rely on government dollars have also
been preparing for cutbacks for months. That preparation will undoubtedly limit
the initial hit. Cuts will be implemented over months, some bigger than others,
creating what Homeland Security Director Janet Napolitano called "a
rolling ball" that keeps slowly growing.
Some people, however, will feel the pain right away. While most schools will
not absorb cuts until next year, so-called "impact aid" districts -
those on federal property, predominantly on military bases and Indian
reservations - will take their cuts right away. The Department of Education
says there are about 1,200 such districts facing a total of $60 million in
spending cuts, effective March 1.
Not that the hurt won't eventually get everywhere else as well. Under current
conditions, it most certainly will. The sequester is a 10-year process designed
to cut $1.1 trillion out of the federal budget, with cuts of almost 8 percent
to defense spending and 5 percent on the domestic front. In a statement
released last week, the National Conference of State Legislatures said states
will lose $5.8 billion in federal aid in FY 2013 alone.
Worse, NCSL notes, is the ongoing "uncertainty" this all creates for
the states. This includes not only the March 1 cuts, but "the second
sequester coming March 27 [when the federal government must either pass a budget
or adopt a resolution to fund government operations], the FY 2013 continuing
resolution and the 2014 federal budget." Federal dollars comprise 34
percent of overall state spending, and since most state budgets are finalized
in the spring, this uncertainty leaves them to "face the near-impossible
challenge of balancing their budgets without knowing how much federal funding
to expect."
States with a big military presence - bases, large numbers of civilian
Department of Defense employees or both - could eventually face the biggest
hits. According to the the White House, in California, 64,000 civilian Defense
Dept workers could face furloughs; Virginia could furlough up to 90,000.
Maryland could furlough 46,000; Washington 29,000, North Carolina 22,000 and
Hawaii 20,000. Texas could lose $233 million in base operations funding, while
South Carolina could lose $81 million.
A bigger question is what all this will do to the nation's already slow
economic recovery. In spite of many predictions of Wall Street panic and a
return to recession, markets have so far remained calm. The Dow Jones
Industrial Average in fact hit a near-record high last week, climbing to 14,075
on Wednesday. But economist Dean Baker, co-director of the Center for Economic
and Policy Research in Washington DC, says it is unreasonable to expect the
cuts won't become a drag on the economy.
"This is pulling money out of an economy that is already growing very
slowly, which is a further hit to growth," he says. "At best, this
economy is growing at about 2 percent right now, which is not even enough to
keep up with the growth in the labor force. That means we're going to end up
with an increase in unemployment."
Whether any of these more dire predictions come true remains to be determined.
As SNCJ columnist Lou Cannon wrote in last Thursday's RealClearPolitics,
"the sky is not falling - yet." That is a key qualifier. With most of
the worst sequestration impacts not due in the short term, all eyes now are on
the next line in the sand, March 27. Since no actual budget deal is expected,
Congress must either approve a new concurrent funding resolution or shut the
government down. Baker calls the latter scenario "unlikely," saying
lawmakers will likely use this as an opportunity to reconfigure this round of
sequestration cuts, dropping the meat cleaver in favor of more precise cuts
that spare effective government programs and target bloated ones.
"How March 27 works out depends on how March 1 works out," he says.
"If there are bad results, the public may well pressure the government to
act."
We'll see. My colleague Lou Cannon, noted above, is considered by many to be
the finest of former president Ronald Reagan's many biographers. As Cannon
notes, Reagan once told him that the most overlooked accomplishment on his
resume was his time as president of the Screen Actors Guild, Hollywood's most
powerful union. When asked what he learned there that was so important, Reagan
replied, "That the purpose of a negotiation is to get an agreement."
It is a lesson seemingly lost on the White House and Congress these days.
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