The 2011 deal to raise the debt ceiling included an across-the-board cut to planned spending on defense and many domestic programs. This “sequestered” spending would start small in year one — it would amount to roughly $44 billion in 2013 — but would more than double by 2021, adding up to a total of about $1.2 trillion in withheld spending on the military, discretionary domestic programs, and interest payments, and to a far lesser extent on entitlements. Under sequestration, the defense budget takes by far the biggest hit: Though it constitutes 17 percent of the total federal budget, it accounts for half the spending cuts in FY 2013 and about 42 percent of the cuts through 2021. Non-defense discretionary spending would also take a sizeable hit: It accounts for 13 percent of total spending but 27 percent of scheduled cuts. By contrast, the mandatory entitlement spending that makes up 64 percent of the federal budget, and is the greatest driver of our long-term fiscal crisis, is held mostly harmless. It accounts for just 15 percent of sequestration.
The sequester — in its failure to sensibly prioritize cuts and its cavalier treatment of defense as a kind of bait — is an unwise policy and was understood to be so at the time, which is why we withheld our support from it. The idea in Washington was that its unwiseness would be an incentive for both parties to replace it with better cuts. Now the sequester is about to take effect and Congress has, of course, not come up with anything better.
The seeming inevitability of the cuts has both sides scrambling to avoid blame, though President Obama seems to be working much harder.
In remarks on Tuesday, Obama warned of “arbitrary” and “brutal” cuts liable to “eviscerate job-creating investments in education and energy and medical research.” Then, in front of a wall of human props dressed as firemen, he foretold a litany of impending disasters: emergency responders and federal agents kneecapped by budget cuts and furloughs, prosecutors forced to let criminals walk, unmanned air-traffic-control towers, roving bands of laid-off teachers, hordes of children robbed of health care, unvaccinated millions spreading disease through the population. The president stopped short of predicting human sacrifice, dogs and cats living together, and mass hysteria. But the gist was similar.
Lost in the president’s hyperventilation is the fact that under sequestration the federal government will spend just 1.5 percent less this year than it would like to, and still slightly more than it spent in 2012. Indeed, it will spend more than it has in any year in history save one (2011). And even discretionary spending, which takes the brunt of the cuts, will be set at — shock, horror — 2009 levels. Austerity, this is not.
To be sure, there are still good and bad ways to administer very small drops in very large buckets. But while the composition of the sequester as it stands is far from ideal, we aren’t sure any of the extant alternatives are any better.
Congressional Democrats have offered plans that replace the first year of sequester with a roughly 1:2 ratio of nominal cuts (mostly to farm subsidies) and — you guessed it — tax hikes. Worse, the paltry spending cuts — including additional defense cuts — would be spread across the out-years of the existing plan, proving again that the Democrats’ fiscal patron saint is J. Wellington Wimpy, who promises to pay you next Thursday for a hamburger today.
Some defense-minded Republicans say that the first year of cuts should be undone and the federal work force should be gradually downsized over the next decade to replace the savings. We cannot endorse this idea. As with the Democrats’ plan, with this plan Congress would be trading one year of definite cuts for the promise of cuts at some point in the future, while creating the precedent that this future could be indefinitely deferred. A better option is the House Republicans’ plan of last year, which would replace the defense cuts by a modest paring back of the welfare-state expansion effected by the stimulus. Unfortunately, re-passing that plan does not appear to be a live option.
In the face of poor alternatives, it is best to accept the new spending levels for 2013, including decreased defense spending, and to focus on ensuring that the slightly smaller pool of money is managed slightly more intelligently — by, for instance, giving agency managers discretion about where the cuts come from in the near term and using the appropriations process to allocate future cuts in the out-years. This assumes, of course, that slightly more intelligence is possible in Washington.