As probably the only person on the planet that thinks government budgets are interesting, watching the last couple months of budget negotiations in the US Federal government have been really fascinating, extremely frustrating, and super terrifying. Even worse, every time I go on facebook or twitter I see a multitude of myths and misunderstandings regarding the Sequester negotiations being passed around by good intentioned people. This misinformation has got to stop, and if no one else is going to address it, it might as well be me.
I also want to add as a disclaimer: I worked as a staffer on the Obama Campaign for most of last year, so I’m clearly biased towards the Obama Administration. However, now that the election is over I no longer have any official position nor am I being paid by the campaign, the Whitehouse or any other organization connected with the president, the DNC or any other political organization. I am a free agent now and everything I write here comes from my own expertise in tax and budget policy and research.
What is the Sequester?
Back in 2011, Congress was in difficult budget negotiations that seemed nearly impossible to solve. Instead of actually negotiating right then and there, they decided to push the decision until the end of 2012, after the November election, thinking that it would be easier to come to an agreement with the election behind them. To make sure they would actually come together in a true negotiation, they came up with something that has colloquially been called the Fiscal Cliff.
The Fiscal Cliff was essentially a law passed by Congress that said that unless they came to an agreement before New Years, devastating budget cuts and high tax increases would take effect. The idea was that faced with utter disaster, republicans and democrats would come together in solidarity and save the country. Instead, just after New Years, they passed a law allowing some tax increases and pushed the budget cut portion of the fiscal cliff back to March 1, 2013. The Sequester is the cuts that were to take effect in March if Congress did not act to avoid it.
Now that March 1st has come and gone without an agreement, the Sequester has taken effect. However, the cuts were designed to happen slowly over many months, so the effects might not be obvious right away.
Additionally, it’s worth mentioning that there are two types of government spending: Mandatory and Discretionary. Mandatory Spending is spending required by law. It is not considered during budget negotiations and can only be changed by changing the program it funds. This includes things like Social Security, Medicare and Medicaid. The Sequester does not affect anything that falls under Mandatory Spending. Discretionary Spending is what we typically think of when we think of lawmakers negotiating a budget. If they wanted to, they could double the budget or cut it in half. The $1Trillion in sequester cuts goes entirely to programs funded by Discretionary Spending.
The Sequester will activate
$500B in cuts to Defense programs and $500B in* cuts to domestic programs. Additionally, agencies don’t get to decide what types of things within their organization will get cut. The cuts will affect all programs within an agency equally and money cannot be moved from a less important program to a more important one except in a couple special instances. This means that under the Sequester, for all non-exempt programs, projects, departments and agencies, everything will have a decrease in funds.
I saw this chart on Facebook that suggests the Sequester cuts represent only a very tiny portion of government spending. If it’s so small, why is it such a big deal?
This chart seems to have been popular on social media among those saying that the Sequester doesn’t matter. It also happens to be incredibly misleading. I don’t even want to get into the fact that looking at the budget over a 100-year span without considering GDP is completely deceptive. That doesn’t really have anything to do with the Sequester though so I’ll ignore it for now. Basically, the only part of this graph that matters for our discussion is the very last 2013 column.
If you check out the US Government Budget for FY2013 you’ll see it totals to $3.9 Trillion. Their 2013 column seems just a bit lower than this, but it’s close enough for the internet. As I mentioned earlier, the Sequester represents $1 Trillion in
cuts savings over 10 years. This is about 25% of the entire CBO estimates this to be about 10% of the* 2013 US discretionary spending budget. That little red bit on the chart looks like about 2% so they are off by an order of magnitude a lot. Whoever made this chart was either intentionally attempting to mislead or is really bad at math.
Hey look, I can make a chart in like 2 seconds with accurate numbers:
The deficit is bad, so how could something that lowers the deficit be bad?
The sequester cuts government spending so it also greatly reduces the deficit. The question is really over whether a mandatory 25% cut to literally every single thing the government does is really the best way to be reducing our deficit.
First of all, these are cuts that happen fairly quickly with little warning. A negotiation in cuts to a program that a lot of people depend on would typically be phased out over a long period to give employees time to find new jobs and States or nonprofits the opportunity to pick up where the federal government left off. Instead, under the Sequester, we are looking at immediate furloughs for employees and cuts to government benefits that no one is really ready for.
Additionally, without the option to choose what is being cut, cuts cannot be selected in such a way that would minimize the impact on the economy or government services and decrease inefficiency. Consider, for example, treatment for people with mental health. If people who are mentally ill are able to get treatment, they are more likely to be working and contributing to the economy and paying taxes. When we cut these programs, we might gain some funds we are no longer spending, but we also lose some tax dollars, which minimizes any gain we might have had, to say nothing about the people who now are unable to get the treatment they so badly need. Some programs are more efficient to cut than others and some programs are more disposable than others. We’re far better off picking and choosing what gets cut rather than letting across the board cuts go into effect.
Isn’t it better to get the Sequester budget cuts than to get no cuts at all?
This is a false choice. The only way to get rid of the Sequester is to negotiate a package of budget cuts and tax increases. There is no “no cuts” option. The real question would be “Is it better to have across the board
25% 10%* cuts or to negotiate an equal package of cuts and taxes of our own choosing?”
If the sequester goes through, what will happen? How does this affect me?
If you are a government employee, you can expect furloughs. Once a week or so, you will be forced to take a day off of work for no pay. If the Sequester goes on long enough, you might be temporarily laid off. I really hope your salary wasn’t important to your own wellbeing or that of your family. Good luck with that.
If you aren’t a government employee, you’re not completely off the hook. You’ll start to notice some minor inconveniences like extra long security lines at the airport since a bunch of the TSA employees will be home on their furlough day. If your child’s school receives federal money, their class sizes might grow and their afterschool programs canceled as teachers are laid off. If your child is in a special education program, that could be cut.
If your house catches on fire, you better hope that your firefighter is not on his mandatory day off because the federal funds they get were greatly reduced. If you’re a college student on work study, you might see a reduction in your financial aid. If you are a low-income woman, you may no longer be able to get breast and cervical cancer screenings.
You know those vaccine clinics that Women Thinking, inc has done at past skeptic events like TAM and Dragon*Con? Those vaccines were paid for by the CDC, and many of them don’t just go to us, but to children who live in poverty and cannot afford them otherwise. Like all other government programs, under the Sequester the CDC will not be able to afford to vaccinate as many children for whooping cough and measles.
We all celebrated last week when the Violence Against Women Act was renewed, but under the Sequester, funding for that program will be cut and many women will go without the support services they need. Are you a scientist? Do you depend on NSF grants to get the funding for your research? Well, good luck because just like everything else, the amount of money going to NSF grants will be cut by quite a bit. I could go on naming more programs that will lose a lot of their funding, since pretty much everything the US government does will be included, but I think you get the picture.
Overall, this huge contraction in government spending and subsequent uncertainty is really bad for the economy. I have seen many different estimates for exactly how bad it might be, but since I’m not a macroeconomist myself, I don’t really have any good way of parsing through the numbers. So for now lets just assume that massive budget cuts and layoffs will probably be bad for the economy as well.
Ok, so what do you think Congress will do now?
I don’t know. Seriously, I have no idea. I cannot see into the future and politics isn’t really my area of expertise (I’m more of a policy girl), so you’ll have to check your favorite news outlet or political bloggers to get an answer to this question.
As an apology, please accept this photo I took of a kitty yawning. Her name is Leela because she has only one working eye.
When I started this post, I said I find budgets interesting but I didn’t say why. The reason is because a simple 256 page document with lots of pie charts and lists of numbers is what decides how we experience our interactions with the government, whether its how long we’re going to wait in line to get through airport security, financial aid so we can go to college, or how many children will be vaccinated in our community. The Sequester isn’t just a bunch of arbitrary numbers on paper. It is people’s jobs, teachers, domestic violence support, first responders and research grants. These numbers really mean something for the people affected by these programs.
Featured photo of Leela taken by Jamie Bernstein.
*Edit: Pingje in the comments pointed out that it is $1 Trillion in savings over 10 years and not $1 Trillion in immediate cuts. Apparently I should be getting my information from Wikipedia rather than reading through CBO reports. CBO estimates are that this represents about 10% of the 2013 budget (although it will feel higher since we are already partway through the year). Sorry for the mistake. Please accept this 2nd adorable Leela photo as an apology: