The Sequester - Are we being hornswoggled?

[Stanley]

I have heard that the sequester will chop about 85 billion dollars from the Federal budget. This is about 8% of this year's deficit, and 3% of the total budget. The biggest cut by agency will be about 13%.

How Federal Spending Would Be Cut Under the Sequester - WSJ.com

Many of us have had to cut our budget from one time to another. Is it really going to be that bad? Even a 13% cut is not exactly a meat-axe, maybe a chief's knife?

My instincts tell me it won't be that bad.

Note: I carry no brief for either party. I can and do split my vote very frequently.

 

[TOOLMAN]

I have heard that the sequester will chop about 85 billion dollars from the Federal budget.

My instincts tell me it won't be that bad.

Note: I carry no brief for either party. I can and do split my vote very frequently.

I have served as an appointed public official at the county, and state level. Budgets were in the Millions - not Trillions, but from my experience, you could sustain this level of cutting for several years before you cut to the bone. Seems to me government in general is about 7O% efficient vs. the private sector. YMMV.

 

[UnderTheRadar]

Agreed. Obviously politicians are going to spin it as if it was the end of the world. I bet it is like waking up on Jan 1, 2000.

 

[meierlde]

Of course the media have to spin it as the great crisis, because they need to keep the eyes on their adds. Then the officials have to describe the worst case partly to get attention. I sometimes think that doing away with over 50% of the reporters would not hurt for example, perhaps then feeding frenzies among the media would not be as strong.

 

[martyp]

I don't know . . . It's hard for me to see how across the board budget cuts won't be painful to us somewhere soon. National parks? Air traffic control? Some defense contracts? My guess is that Congress and the Administration will wait to see where the most blowback comes from and then fund those areas or authorize moving funds around. I think this will be limited and in the end there will be less spending for the rest of the year. Next year is another story.

 

[jollystomper]

Bear in mind that what is being cut is not actual spending, but projected spending.

An analogy. This year I spend $100 on widgets. Next year I plan to spend $106 on widgets. But due to the sequester, my budget is "cut" so that I can only spend $103 on widgets. Oh, the horror!

Politicians have learned that, to make a budget cut seem painful, cut the most visible things that people will see. Instead of cutting a level of bureaucracy that is invisible to people (and which if it were, people would wonder what they really do), cut something visible, like rangers at a national park, to make people feel the pain... and get upset at the budget "cut".

In my view - based on having worked with more than a few federal agencies in my career - is that there is little incentive in agencies to save money. If you spend less than your budget allocation, rather than being rewarded for being thrifty, you are "punished" by having your budget reduced because obviously you don't need that much money. So the game tends to be to always spend your budget, which has led to some interesting things at the end of fiscal years...

 

[martyp]

Here is one bit of information that explains why we are in the mess we are in.

As Sequester Deadline Looms, Little Support for Cutting Most Programs | Pew Research Center for the People and the Press

 

[Nodak]

As far as I'm concerned the sequester can go ahead. The small installation I worked at spent large amounts of money on useless items like plastic plants just to get rid of the money at the end of the year. We had to do that so our budget would not get cut. I will never understand that way of doing business.

 

[timo2]

The only problem with the sequester is it cuts regardless of merit or priority. In my experience, some of the most useful federal programs for regular citizens are the most underfunded, and across the board cuts affect those programs more. On the other hand, federal agencies have known this was coming for a year, and many have been able to prepare for it. It also puts a whole year of cuts into just a few months, so that is a little more difficult to prepare for.

That said, I'm for letting the sequester go ahead. Congress is totally unable to prioritize federal programs, so this is the only way. It cuts defense, which would never be cut otherwise, and does not mess with Social Security, and the only effect on medicare is that payments for doctor's visits will be reduced by 2 percent (I read that on the internet somewhere, so it must be true ;-).

Here is an AARP article How the Sequester Could Affect Social Security, Medicare and More - AARP

 

[donheff]

It would help if Departments had some ability to shift funds around rather than cutting every separately budgeted program equally. Unfortunately, there is no way the Hill could come up with a process for making such shifts. If they could figure that out they could figure out a grand budget bargain.

This may or may not have significant impacts on the recovery but it doesn't sound anywhere near as dangerous as a debt ceiling default. Of course that crisis is coming again soon.

 

[Texas Proud]

It would help if Departments had some ability to shift funds around rather than cutting every separately budgeted program equally. Unfortunately, there is no way the Hill could come up with a process for making such shifts. If they could figure that out they could figure out a grand budget bargain.

This may or may not have significant impacts on the recovery but it doesn't sound anywhere near as dangerous as a debt ceiling default. Of course that crisis is coming again soon.

I did see an article where they were talking about adding some language to the next continuing resolution that would allow them to move around the money.... I think they want this in defense more than others since most defense spending is very specific to a program and the cuts come out of the general fund...

 

[ERhoosier]

Regarding the sequester, I view it as a minor issue given it's simply a small decrease in the rate of increase in US Gov't spending (i.e. Washington's definition of a spending "cut"). Even after sequester "hits", most Gov't agencies will still get more $$ than they got last yr. But each US Agency head is inventing absurd scenarios to protect their $$$ like a bunch of mini-warlords. Example- ABC News (hardly radically right-wing) took apart Transportation Sec LaHood on his claims of need for massive air traffic control cuts if sequester happens-
Devastating Sequester Spending Cuts? Give Me a Break! - ABC News

My guess is that there will be some sort of legislation passed allowing various gov't agencies more flexibility to deal with these honestly minor overall "cuts". It strains credibility to think this small slow down in Gov't spending will affect the overall US economy in the least. Remember Congress just passed off-budget $60+Billion emergency aid package for Hurricane Sandy "relief" (inc. much not directly related to storm relief, BTW). The 2013 sequester is only $85B, so net ~$25B in a $16 TRILLION US economy (i.e. net sequester = 0.15% overall US GDP). Meh.

 

[Midpack]

They've already delayed it once (remember all the overdone hand wringing in Dec), nothing stopping them from doing it again (and again). Several "leaders" have plans to delay it for several months, even out to 2014. Why would anyone doubt our ability to 'kick the can down the road,' perfected over a generation...

 

[Marc]

We are looking at about a 9% deduction; manageable but still an impact. What is more concerning is a lack of FY13 budget; the Continuing Resolution is quite binding and talk of a full year CR is a large concern.

Marc

 

[martyb]

It will mean an unpaid furlough and a 20% cut in pay for however long it lasts. We are being told to plan for 22 weeks with one day per week unpaid.

 

[ERhoosier]

Why would anyone doubt our ability to 'kick the can down the road,' perfected over a generation...

Number of Southern European nations thought they had "perfected" this too. But whether it's an individual or a nation, eventually big deficit spending comes back to bite ya in the a$$

 

[Midpack]

Number of Southern European nations thought they had "perfected" this too. But whether it's an individual or a nation, eventually big deficit spending comes back to bite ya in the a$$

Except they couldn't print their own money, big difference...

 

[Nodak]

Here's a Congressional Budget Office take on it.

 

[scrabbler1]

Nodak, two good posts you made there (#8 and #18, the graph). I'm with you and the others who generally favor the sequester moving forward. It is a good test to see if the voters really want to see government spending "cut."

 

[HawkeyeNFO]

...federal agencies have known this was coming for a year, and many have been able to prepare for it.

I checked in to the Pentagon last May, and had several indoc sessions with old farts wearing 3 and 4 stars on their shoulders, and at that time they all said the plan was to "do nothing" and "put our head in the sand." Well, that worked the first time, but now in the past few days I have had the pleasure of determining which contractors will lose their jobs and/or how many hours will be cut from their contract. None of which is merit-based. Then when the furlough hits the govt employees, and the contractor support is decreased, the only ones left unaffected are the military. Guess who will be working extra hours (no overtime) to pick up the slack?

That being said, the bureaucracy is clearly bloated. DoD, especially at the pentagon and the major staff operations, should be cut to save money, and needs some true incentives to become more efficient. (Just don't mess with my 20 year retirement )

 

[mickeyd]

Both national and local media have fallen in love with the word sequester. I recall looking it up when I first heard it used in this manner about 18 months ago. I believe that Jack Lew(?) of the WH staff first suggested that it be added to an upcoming budget bill. He will probably be our next Sec of Treasury. I'll bet he wishes he had not made the suggestion. But he did and we are all talking about it.

 

[Texas Proud]

They've already delayed it once (remember all the overdone hand wringing in Dec), nothing stopping them from doing it again (and again). Several "leaders" have plans to delay it for several months, even out to 2014. Why would anyone doubt our ability to 'kick the can down the road,' perfected over a generation...

They delayed it by 'cutting' (IIRC) $24 billion, which was the amount that represented the first three months of cuts...

IOW, it was not just a kick the can down the road, but agreed upon cuts.. I would hate to see it kicked without some kind of cut... Let is happen and see where things go and make adjustments where needed...

 

[Midpack]

They delayed it by 'cutting' (IIRC) $24 billion, which was the amount that represented the first three months of cuts...

IOW, it was not just a kick the can down the road, but agreed upon cuts.. I would hate to see it kicked without some kind of cut... Let is happen and see where things go and make adjustments where needed...

If $24B of the easy stuff (per Simpson & Bowles) vs a goal of $4T over 10 years is progress to you, it's still kicking the can down the road IMO. But I'm hopeful they will make meaningful progress eventually too...

 

[martyp]

Regarding the sequester, I view it as a minor issue given it's simply a small decrease in the rate of increase in US Gov't spending (i.e. Washington's definition of a spending "cut"). Even after sequester "hits", most Gov't agencies will still get more $$ than they got last yr. But each US Agency head is inventing absurd scenarios to protect their $$$ like a bunch of mini-warlords. Example- ABC News (hardly radically right-wing) took apart Transportation Sec LaHood on his claims of need for massive air traffic control cuts if sequester happens-
Devastating Sequester Spending Cuts? Give Me a Break! - ABC News

LaHood does have a point about built-in constraints. Cutting a budget late in the year tends to have disproportionate impacts throughout an organization. There is the 30 day notice for many jobs and the terms of some contracts. Plus the delays due to grievance procedures brought by those loosing their jobs or unions. They could have prepared for this but of course everyone in government acted as if it wouldn't happened. Except maybe DoD with reduced spending significantly in the final quarter of 2012 and you saw the handwringing over that.

 

[ERhoosier]

LaHood does have a point about built-in constraints. Cutting a budget late in the year tends to have disproportionate impacts throughout an organization. There is the 30 day notice for many jobs and the terms of some contracts. Plus the delays due to grievance procedures brought by those loosing their jobs or unions. They could have prepared for this but of course everyone in government acted as if it wouldn't happened. Except maybe DoD with reduced spending significantly in the final quarter of 2012 and you saw the handwringing over that.

Sorry but still not buyin' it. As ABC pointed out, LaHood's budget ($$ over which he has control!) after sequester would still be higher than last year. And he wasn't threatening large scale ATC cut backs under his Agency's FY 2012 budget.
However the meat-cleaver aspect of sequester is rather silly. As many have said, logic dictates prompt passage of legislation granting Transfer Authority allowing greater flexibility in ability of gov't agencies to minimize impact of this slowing of gov't expansion.

White House and media cry wolf