The ‘No Fingerprints’ Approach to the Sequester

by Reihan Salam

Recently, Yuval Levin made an effort to contextualize the spending reductions mandated under the Sequester into proportion. I am sympathetic to Yuval’s analysis and his conclusion:

It would still be much better to reduce this spending in a more purposeful and intentional way—prioritizing and allocating cuts by implementing reforms of government programs that cost too much, and especially of entitlement programs that could provide the same benefits at far lower cost. This kind of tiny cut doesn’t get us much, and some of its effects will genuinely harm some vulnerable Americans. By all means let’s avoid it. But let’s not pretend that what we would be replacing is some bold and massive spending cut. It is a tiny fig leaf placed over Washington’s inability to enact even tiny reforms to yield tiny savings and improve our fiscal outlook by a very little bit. Like the tax increase imposed in this year’s fiscal-cliff deal, it’s basically a distraction from our actual fiscal challenges, which have to do almost entirely with the entitlement programs.

The president and his allies have pressed the idea that the cuts under the Sequester are brutal and deep, yet the far bigger issue is that the cuts under the Sequester will in many cases be weird and unpredictable. Loren Adler and Shai Akabas of the Bipartisan Policy Center summarize this complex landscape:

Setting aside the magnitude of the reductions, the most difficult aspect of both the defense and domestic cuts is that they will be made across the board to all non-exempt government spending regardless of programs’ merits or demerits.*** The reductions designed by law are executed at the Program, Project & Activity (PPA) level of the federal budget, sometimes defined in appropriations bills and which often includes very granular categories of expenditures, such as “two Virginia Class Submarines” or “salaries and benefits” of a particular agency.

Absent a new law passed by Congress, the president does not have the ability to spare one type of spending and cut more from another. This creates uncertainty in both the public and private sector because there remains much to be determined about how PPAs will be defined by agency administrators and how the cuts will be implemented. This inability to plan is already acting as a drag on economic growth.

Furthermore, the immediate and across the board nature of the cuts, along with their magnitude concentrated in a seven-month period, will impair economic growth as the year progresses. [Emphasis added]

Dylan Matthews explains that while spending reductions are designed to occcur at the level of program, project, and activity, it is very hard to determine what constitutes a program, project, or activity. The obvious solution, as Adler and Akabas suggest, is to grant the Obama administration the flexibility to make cuts with a scalpel rather than a cleaver. The only problem with this solution, as Stan Collender tells Dylan, is that the president sees it as politically dangerous:

“One reason the White House hasn’t expressed interest in getting the flexibility that Senate Republicans want to give it is that it doesn’t want to take the responsibility,” for the cuts in sequester, he tells me. If the White House actively picks and chooses programs, then it “owns” the cuts more than if it binds its hands and just cuts uniformly. 

To someone who is inclined to be critical of the president, this looks like a serious abdication of responsibility. It also raises larger questions about the role of the executive branch during a period in which we lack a sufficient public consensus to reach even short-term budget agreements through a normal legislative process, yet federal spending has an enormous impact on the private economy.   

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.