Sequestration: An Extreme Consequence of Congress’ Ineffectuality

Annette Beck, MPA

Introduction

Sequesters are designed to reduce spending, however they often fail in this regard and instead create real harms: endangering public safety, forcing federal agencies to furlough their employees, and creating a climate where politicians can game the budget system Congress should either amend sequestration’s terms, or repeal it and replace it with another budget concept to cut spending.

Background

Sequestration is a budget concept intended to enforce discretionary spending caps and the statutory Pay-As-You-Go Act (PAYGO) rules. The Budget Control Act of 2011 redesigned sequestration as a consequence of the newly formed congressional debt-reduction committee, commonly referred to as the Supercommittee. If the Supercommittee, made up of an equal number of democrats and republicans failed to pass deficit reduction legislation, sequestration would occur Sequestration is an automatic triggering of spending cuts that goes into effect when Congress either cannot agree on ways to cut spending on appropriation bills that are in excess of the limits outlined in the annual budget resolution, or does not pass a new budget resolution increasing the spending caps. In an effort to get control of the deficit, Congress repeatedly raises the spending caps toward the end of the legislative session in order to match spending totals that are already appropriated. This largely wipes out the incentives behind sequestration and other reforms in the 2011 Budget Control Act that were designed to stabilize the deficit. Spending cuts as a result of sequestration are split evenly between defense and non-defense agencies, and every non-defense agency has the same across-the-board percentage of cuts. Most entitlement programs, like Medicaid and Social Security, however, are exempt from sequesters.

Advantages and Disadvantages

Advantages

The advantages of sequestration are minimal because it was designed to be so painful that Congress would be forced to work together to find an alternative to exceeding the budget caps. Spending is reduced during sequestration, but the amount is insignificant in relation to total federal spending.

The Congressional Budget Office (CBO) projected federal spending with and without a sequester from 2012-2021. The graph below represents these projections, showing federal spending will increase by $1.7 trillion (blue line) by the year 2021 without the sequester, and $1.65 trillion (red line) with it, a savings of $50,000,000.

Disadvantages

While the advantages of sequestration are insignificant, the same can not be said of the harms sequestration causes. Sequestration was meant to cut spending at federal agencies equally, but politicians have found they can game the system, and carefully cut spending on things that would not be missed. For example, in 2013, the Federal Aviation Administration cut spending to programs that were unwarranted – like the $150,000 that was designated to the Lake Murray State Park Airport in Oklahoma that only has one take-off and landing per week.

Additionally, many of the proposed cuts, could be construed as deceitful, such as when the Justice Department prevented furloughs by cutting $300 million in “expired balances,” which is money that had been allocated to the department in past years, but wasn’t spent and had already legally expired.

Another disadvantage to sequestration is that public safety that was endangered due to some agencies’ budget cuts.Immigration and Customs Enforcement (ICE) was forced to release thousands of criminal illegal immigrants from detention centers, and the Judiciary Branch had to reduce funding to drug and mental health treatment.

Furthermore, sequestration has severe negative effects on federal employees. Thousands of federal employees in both defense and non-defense agencies were furloughed for multiple days. Several federal agencies implemented a hiring freeze and imposed cuts on administrative support, travel, and supplies to slash spending.

Proposal for Change

In its current form, sequestration is a flawed package. To make it effective, Congress should either change the terms of sequestration, or replace it.

Different terms

In order for sequestration to be effective, the burden must be shared by everyone. Spending cuts must be across all agencies, including the entitlement programs like Social Security and Medicare, even if they slash just a few dollars per recipient. Legislators who are responsible for a reduction in Social Security benefits would lose the support of their elderly and disabled constituents, which would spur politicians to reach spending and budget deals before sequestration is enacted.

Repeal

The other option is to repeal sequestration and replace it with a different concept that will force Congress to compromise so as to not exceed the previously agreed upon budget caps. An example would be a proposal put forth by the Committee for a Responsible Federal Budget (CRFB). The CRFB released the Sequester Offset Solutions (SOS) plan on September 16, 2015, which provides $300 billion of sequester relief that is fully offset and deficit-neutral over a ten-year period. This plan is a reasonable solution because the savings are permanent and grow faster than the costs, which would actually reduce both the deficit and debt.

The SOS plan would accomplish sequester relief in four parts:

  1. Establishing new spending caps above the sequester levels
  2. Offsetting two-year sequester relief with targeted mandatory savings and receipts
  3. Offsetting longer-term relief with the adoption of the chained consumer price index (CPI)
  4. Strengthening enforcement of budget caps

Conclusion

Sequestration was meant to be a budgeting concept so horrendous that Congress would do everything in its power to ensure it was not enacted. Unfortunately we live in a time where members of Congress are so divided that they cannot put their differences aside and compromise on how to reduce spending. Sequestration is more harmful than helpful for the economy, federal employee morale, and public safety. It is time that Congress amend the terms of the sequester or repeal and replace it with a budgeting tool that would cut spending without sequestration’s harmful effects.

 

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