Daily Updates

November 12, 2013

Automatic spending cuts would bite more in 2014

WASHINGTON — It’s not just longstanding battles over taxes and curbing mandatory spending that are obstacles to a year-end pact on the budget. Another problem is a perception among some lawmakers that the automatic spending cuts known as sequestration haven’t been as harsh as advertised.

Indeed, the first year of the automatic cuts didn’t live up to the dire predictions from the Obama administration and others who warned of sweeping furloughs and big disruptions of government services.

But the second round is going to be a lot worse, lawmakers and budget experts say. One reason is that federal agencies that have emptied the change jar and searched beneath the sofa cushions for money to ease the pain of sequestration have been so far able to make it through the automatic cuts relatively unscathed. Employee furloughs haven’t been as extensive as feared and agencies were able to maintain most services.

Most of that money, however, has been spent in the 2013 budget year that ended on Sept. 30.

The Pentagon used more than $5 billion in unspent money from previous years to ease its $39 billion budget cut. Furloughs originally scheduled for 11 days were cut back to six days. The Justice Department found more than $500 million in similar money that allowed agencies like the FBI to avoid furloughs altogether.

Finding replacement cuts is the priority of budget talks scheduled to resume this week, but many observers think the talks won’t bear fruit. Both sides appear to see leverage. Democrats are hoping that $20 billion in new Pentagon cuts below levels imposed by sequestration will force Republicans to yield. Republicans say far more of their members are willing to keep the cuts, which appears to have added to the resolve of GOP negotiators.

A failure of the talks, led by House Budget Committee Chairman Paul Ryan, R-Wis., and his Senate counterpart, Patty Murray, D-Wash., would mean that agencies that have thus far withstood the harshest effects of the across-the-board cuts in 2013 would get hit with a second round of cuts that’ll feel a lot worse than the first.

A drop in participation and lower-than-expected food prices allowed a widely supported food program for low-income pregnant women and children to get through this year without having to take away anyone’s benefits. A second round of automatic sequestration cuts could mean some women with toddlers lose coverage next year.

To avert furloughing air traffic controllers and disrupting airline flights this year, Congress shifted $253 million in automatic cuts to airport construction funds. Those funds are needed to meet a requirement to install runway safety areas at all airports by 2015, so that pot of money won’t be available to bail out controllers again.

Senate Appropriations Committee Chairwoman Barbara Mikulski, D-Md., said agency budget chiefs “squeezed everything to get through the first year thinking we would come to our senses.”

However, most of those accounting maneuvers were one-time steps. The automatic spending cuts in 2014 promise to be far more painful.

For the time being, Congress has frozen 2014 spending at 2013 sequestration levels while negotiators seek a budget deal that would ease some of the automatic cuts. Absent a deal, the spending “caps” on agency operating budgets will shrink by another $20 billion or so, with most of that money squeezed out of the Pentagon.

Nowhere will the effects be felt more than at the Justice Department, which pretty much skated through the automatic cuts in 2013.

“Justice had like half a billion dollars in unobligated balances and so they brought that back and that made it possible for them not to have any furloughs anywhere in the Justice Department, Bureau of Prisons or FBI or whatever,” said Scott Lilly, a former top House Appropriations Committee aide. “But they’ve used that up so they’re going to get hit much harder this year than they did last year.”

The FBI already has suspended training of new agents and has instituted a hiring freeze.

“Quantico is quiet. I have no new agent classes going through there,” new FBI Director James Comey said last month. “I can’t afford it.”

Without relief from Congress, Comey said the automatic spending cuts will require him to eliminate 3,000 positions. The FBI’s 36,000 employees are facing unpaid furloughs of two weeks.

The situation will also worsen at the Pentagon, where the first round was no picnic, eroding combat readiness and grounding Air Force squadrons. Cuts in military training, maintenance and weapons purchases were deeper than average because the Pentagon was allowed to exempt military personnel accounts.

Because of $4 billion in prior-year funding, the Pentagon was able to maintain Navy and Air Force procurement in 2013. Without that money in 2014, the Pentagon will have to the delay the delivery of a new aircraft carrier and a nuclear submarine.

“We are consuming tomorrow’s ‘seed corn’ to feed today’s requirements,” Marine Corps Commandant Gen. James Amos told the Senate Armed Services Committee.

“We might as well shut down the Pentagon,” said House Armed Services Committee Chairman Howard “Buck” McKeon, R-Calif. “You’d better hope we never have a war again.”

Accounts for housing vouchers for the poor took a hit in 2013, but most local housing agencies had previously appropriated but unspent money in reserve. Few, if any, families already getting vouchers lost them. Instead, people on waiting lists seeking vouchers just didn’t get them.

The Center on Budget and Policy Priorities, a liberal think tank and advocacy group for the poor, calculated that 40,000 to 65,000 fewer families will have vouchers by the end of this year than at the end of 2012.  By the end of 2014, between 125,000 and 185,000 fewer families would have vouchers if the automatic spending cuts stay in place unchanged, the center said, and that could mean some families might lose their apartments.

The Commodity Futures Trading Commission, charged with new and complex policing responsibility of the over-the-counter derivatives market under the 2010 overhaul of Wall Street regulations, managed to make it through 2013 without furloughs. But CFTC Chairman Gary Gensler warned agency employees last month that they face up to 14 unpaid furlough days next year.

In Washington on Monday, university presidents from the Association of Public and Land-Grant Universities told reporters that sequestration has translated into canceled research projects and cuts in staff, despite efforts by universities to bridge the gaps. A second round of sequestration could mean closed labs and layoffs.

“We’re not universities that are flush with resources that can put in sort of a buffer in a long period of time,” said University of California, Los Angeles, Chancellor Gene Block.

———

Associated Press writer Kimberly Hefling contributed to this report.

 

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