The Fiscal Cliff and the “Draconian Cuts” to be enacted Friday through Sequester have been the topic of interest in Washington these days. Listening to Secretary of Transportation Ray LaHood (R-IL), one would think that the sky is indeed going to fall.
We should all keep in mind that the 2013 cuts amount to less than 2% of the federal budget and will do little to trim $1.8 Trillion deficit expected in 2013. Over the next nine years the Sequester cuts will amount to $984 Billion, evenly split between Defense and Non-Defense cuts. In the long term, the Sequester will harm the country, and certainly tap our defense readiness. In the short run, they will do little other than to provide additional political fodder for both political parties.
While the White House proposed the cuts, it was the Democrats in the Senate, and the Republican led House who agreed to pass the legislation. That said, lets not forget that the entire idea came from the White House, and it was the President who signed the legislation.
The idea was simple and was supposed to be so difficult to swallow, that both parties would reach a compromise. Only in DC would one hold a figurative gun to one’s head as a means of governing. While in retrospect it was a terrible idea, it is also difficult to imagine that the average taxpayer will actually feel its impact.
Secretary LaHood talks about closing the FAA controlled tower at the bustling Boca Raton airport. That will definitely affect the average American, and the TSA will be forced to have less people milling about than they usually have at the security checkpoints. Each cabinet agency, including DOT and DHS will see cuts, but the true effect remains to be seen. By the way, the Highway Trust Fund for Transportation is exempted from cuts, as are many other programs such as Social Security, Medicaid, VA and Food Stamps to name a few.
As a former federal agency head, it is difficult to imagine how even a 10% cut would be difficult to absorb. Yes, there is that much fat and inefficiency in the federal government. Moreover, all executive branch agencies can use a budgetary mechanism to ask congress to re-allocate money between the programs. An effective agency head will indeed use the “budget re-programming” request mechanism to adjust budgets to keep their agencies running.
The 2013 cuts also almost fall halfway through the fiscal year which began back on October 1, and the cuts fall on the smallest pieces of the budget on what is known as the program-project-activity (PPA) level. That means that the DoD will only see cuts to seven months worth of “unobligated” balances. This all translates into much lower cuts than they could have been and budget officers and comptrollers have already spent months obligating as much money ahead of time in order to minimize the FY-2013 cuts to their remaining budgets that couldn’t be obligated ahead of March 1.
Absent major reform, the bloated federal budget and the deficit will continue to grow in the coming years. According to the CBO, by 2027 the deficit would actually reach 100% of GDP, and that’s a rate that is clearly unacceptable.
The fact is that the government cannot keep spending money like a drunken sailor, and while there will be a few hiccups along the way, such a small cut will not cause the sky to fall, despite what the politicians are currently spinning.