Point of View

Learning the steps to the sequestration dance

February 24, 2013 

Our federal budget debate has shuffled from one anticlimax to another for two years. It started with the government’s near-shutdown in April 2011 and then moved through lesser deals on spending in August 2011 and on taxes this January.

Round Four is coming up and, as it begins, a few lessons can be taken from history as well as our experience so far.

The starting bell for this round is a budgetary event called “sequester,” slated for March 1. Sequester is a technical term for cuts that save over a trillion dollars by 2021 and begin with a formulaic reduction of $85 billion this year. That cliff looms across all of the programs Congress funds annually, including transportation, education, research, statecraft and defense.

Its purpose is to be painful for Republicans and Democrats alike, but many now think it’s the best of the bad options for cutting additional spending. Earlier this month, for instance, the N.C. chapter of Americans for Prosperity petitioned several of our Congress members with the message that “we expect the $85 billion reduction in spending that we were promised.”

Precedent suggests that won’t happen. Sequester as a budgetary mechanism dates back to a 1985 statute, and it was triggered on five occasions between then and 1991. Two of them took effect – for a combined savings of under $12 billion – and one was a calculating error. Of the remaining two, Congress acted after the fact to reduce one by three-quarters and to deactivate the other.

Lesson One: Congress clings to its power of the purse even in contradiction of its own orders, like sequester.

That may well be the case this time also. The spending bills for 2013 are due for consideration by March 27, and those decisions provide a ready-made opportunity to override sequester with a new bargain.

The closing bell for this round is most likely to come May 19 when the U.S. hits its debt ceiling. N.C. Reps. Mike McIntyre, Walter Jones and many others have firmly opposed recent debt limit increases as a way to force spending down.

It is easy to presume that a growing debt is evidence that costs have not been cut. In fact, just as a family spreads each paycheck over several weeks, the government allocates each budget over at least a year and oftentimes over several. The debt swells on any given day based on how quickly agencies spend paychecks Congress has already issued, not on the payroll decisions Congress made on that day.

So Lesson Two is a paradox: Debt can continue to accumulate even as budgets fall and taxes increase.

By implication, allowing the United States to hit its debt ceiling amounts to a family saving money by skipping credit card payments. That makes the problem far worse by causing the interest rate to rise – either for a family or a government – and is no substitute for making better choices moving forward.

Of course, good budget choices are impossible if a budget isn’t passed. Rep. Renee Ellmers and many of her colleagues frequently publicize a count of the days since the Senate last enacted a budget.

Yet Congress budgets through a multi-step process. Setting overall spending and revenue goals comes first, then distributing the spending total among government’s various functions and lastly appropriating those funds on a line-by-line basis. All of those steps are important, but the law hinges only on final appropriations. If they happen, money flows irrespective of whether the earlier steps were taken.

Clocks like Ellmers’ measure the first step. By her count, it’s been over 1,300 days since the Senate planned out its spending and revenue goals. That’s irresponsible, but that step isn’t essential to the process, and so agencies have continued to receive their budgets even up to today.

Hence Lesson Three: You’ll know that Congress really hasn’t passed a budget when the government shuts down.

These are frustrating illustrations of Congress’ indecisiveness, which is especially hard to understand given the wide consensus that the federal budget is marbled with waste. Still, don’t expect waste-related cuts to meaningfully dent the debt.

Everyone in Congress agrees that waste exists, and nearly everyone disagrees about what actually constitutes waste. Every line in the budget is there because someone put it there, and he values it.

Lesson Four: “Waste” usually is shorthand for “someone else’s priority.”

Congress members know this. One of the best signals that the debt reduction debate has gotten serious will be when they move on from “waste” and entertain tough choices about their own priorities.

These lessons won’t put this draining, combative budget debate behind us, but they can make it more focused and more constructive. That’s a worthwhile goal in itself as well as a way to make each step in debt reduction more productive.

Matthew Leatherman, a North Carolina native, is a freelance contributor on state-level international affairs.

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