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September 1, 2014

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Sequester cuts still pack economic gut punch despite tweaks by lawmakers

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A month ago, Washington was in the throes of panic over the looming onset of sequestration cuts, an across-the-board budget chop that lawmakers warned would pack an unwanted economic punch.

Now that there is a congressional deal to reapportion some of the cuts, the political protestations against sequestration have died down.

But their effect on Nevada’s economy likely hasn’t.

“We’re still facing most of the same things,” said Scott Lilly, a former staff director of the House Appropriations committee and current senior fellow with the Center for American Progress. “They’re just taking money out of one place and putting it in another.”

Two weeks ago, the House of Representatives passed a continuing resolution that tweaked the terms of the sequester, particularly in the area of defense spending. For the past several days, Senate Appropriations committee heads were adding their bipartisan flourishes to several other human services provisions of the bill, tempering the blow to programs like Women, Infants and Children nutritional assistance and child care services for low-income workers.

But in just as many other programs, the sequester blow that was feared is the sequester blow that is coming.

“If you go to Nellis and you call the base commander, I think he’s still looking at the same number of days of furloughs for federal employees,” Lilly said. “It would be almost the same as a month ago.”

In fact, Nellis Air Force base has no new information about how the sequester changes might affect their operations, and is making no different plans to react to sequestration than they were a month ago, according to spokeswoman Jessica Turner. Civilian furloughs begin at the end of April, and from there on, will be equivalent to about a 20 percent pay cut through September.

It’s the same story with McCarran International Airport, where the Federal Aviation Administration started sending out furlough notices to airport personnel in early March. Air traffic controllers were told last week that they would learn who from their ranks would be let go today.

Also, no one sees the burden on the Clark County School District being mitigated under the new deal. This month, school officials were anticipating a “worst-case scenario” when Title I funds were cut, affecting reading and math support programs, after-school services, homeless student services and preschool programs.

“No change is still the central theme right now,” said Rick Detisch, quality assurance director at the Clark County Public Schools.

In Congress, lawmakers took several modest steps to ameliorate cuts to certain flagship programs, like Head Start, where the White House estimated cuts would leave about 300 otherwise eligible Nevada children out of the program.

But most of those changes, where they happened, are slight.

“I think they would have liked to put more money into Head Start, since it really can’t afford the cuts,” said Richard Kogan, a senior fellow at the Center for Budget and Policy Priorities. “It’s a program-by-program tug of war.”

The continuing resolution — which will fund the government and federal programs past their current expiry date of March 27 through Sept. 30 — does not actually get rid of the sequester, or change the across-the-board fashion in which it will affect the various agencies. Instead, it shifts some existing funds in the budget so that the sequester cuts won’t hit certain programs as hard as others.

For example, lawmakers pulled $500 million away from a defunct space shuttle program, as Senate Appropriations Chairwoman Barbara Mikulski proudly pointed out on the floor last week, and put that money toward improving security and defense technology, softening the bluntness of the sequester cut to more crucial programs.

Senate lawmakers dug into Homeland Security, Agriculture, and Commerce Justice and Science appropriations in the same way, freeing up money to preserve funding to programs like food safety inspections and the National Institutes of Health.

But in other areas of the budget — such as Health and Human Services, and Labor and Education — there wasn’t as much money to shuffle.

“When choosing between Head Start or WIC or LIHEAP (a program to assist low-income families with home heating and cooling costs), you can’t say which you can defer for a year,” Kogan said. “They’re more just steady, ongoing needs that you can’t short.”

While money is shifted among programs, it isn’t transferred among agencies — that being more of a guns-or-butter philosophical battle between Democrats and Republicans.

In fiscal 2013, dollar for dollar, the sequestration cuts add up to the same top-line splice from the economy: Reducing the fiscal 2013 spending authority from about $1.043 trillion to about $982 billion.

While the budget shifts will certainly help certain programs survive across-the-board budget tightening more ably, experts wonder whether the top-line changes will ameliorate the sequester’s overall effect on the economy — which is what politicians were sounding such a pointed alarm over just a few weeks ago.

“It is true that if you take a dollar from a person that is really high income, vs. taking a dollar from people like you or me, or someone in worse shape, it’s a dollar they would have otherwise spent,” Kogan said. “But I think many of the changes that they made in the underlying bill were not really for economic reasons, but policy reasons.”

Lawmakers, especially Democrats, aren’t defending the changes they made to the sequestration structure as perfect.

“We’re taking care of the next six months,” Sen. Harry Reid said. “I would like to have rearranged things differently. There are things that are happening in Nevada because of the sequester that I would like to have taken out of this bill. They’re not good things that are happening, either.”

But lawmakers are hoping a little temporary pain amounts to a long-term gain in the next year’s budget.

“The Senate Democratic budget proposal actually reverses the sequester,” Reid stated on the Senate floor Wednesday morning.

But there’s no real indication yet that congressional lawmakers will feel more cooperative heading into fiscal 2014 than fiscal 2013 — especially since they have only a few days left to hash out their top-line spending priorities before a mid-April budget resolution deadline.

So far, Nevada lawmakers have shown some willingness to cooperate in supporting the continuing resolutions: In the House, all four members of the Nevada delegation voted in favor of that body’s version of the continuing resolution, complete with rejiggered sequester cuts, this month.

On Wednesday, Nevada’s senators were split on their decision, with Reid voting for the continuing resolution and Sen. Dean Heller voting against it.

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  1. Many of those programs can and should be CUT. WIC--cut off those who've been collecting for 2 years or more consecutive and/or 5 years in total. Anyone can find themselves in a mess but if it takes you longer than that, YOU need to DEAL WITH IT. Remember the sequester is only starting to kick in--most funding cuts are waiting for the end of the fiscal year. Reducing the rate of growth by a bit is not a hardship.

  2. The sequester is an open joke. All programs still get an increase in spending....just not the same percentage of increase as is normally allotted.

    Only in politics can a lower percentage of increased spending be considered a cut.

  3. Obama freaks and shuts the door to his house - he takes away visits to his house from school kids. He lies and he freaks...
    and guess what - over nothing.....

    Obama has been a horrible person always wanting to take all our money from us for his programs - like ski trips for his wife; Mexico trips for his kids, and golf trips for him.

    But when it comes to sequestration its a mini step in trying to control our federal expernses. You know the ones they take from your pay check and you do not get anything for them - besides programs for Obama's kids.

    I love sequestration - keep it forever.