Life after 'Sequester': Does Federal Budget Have $1 Trillion in Fat to Cut?

Article excerpt

The newly launched "sequester" federal spending cuts are large large enough to total more than $1 trillion if they were to stay in place for 10 years.

That wont happen, because no one likes the sequesters arbitrary approach to the budget, in which all programs are supposed to be cut by the same percentage.

But deficit hawks say that deficit savings of at least that magnitude are needed to avoid a dangerous buildup of government debt.

Which raises the question: How hard would that be?

Conflicting answers to that question are as close as the latest TV sound bites or polls of public opinion.

On Thursday, House Speaker John Boehner (R) of Ohio implied fiscal discipline isnt that hard. He called for an even more aggressive goal: getting the deficit down to zero in 10 years (something the sequester doesnt achieve). He said House Republicans will leave the sequester in place until it is supplanted by a balanced-budget plan.

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House minority leader Nancy Pelosi (D) of California, in her own Thursday press briefing, said such spending cuts hurt middle-class families, and said new tax revenue must be part of the solution.

They won't touch these tax breaks for the wealthiest and the special interests, she said, complaining about the Republican position.

Part of this debate, of course, is about such different partisan viewpoints. But, whether one is a deficit hawk or not, its fair to say that imposing this restraint is no cakewalk.

The $1.2 trillion in sequester cuts (over the course of a decade) would equal nearly $1 for every $10 in the discretionary portion of the budget, where most of the sequester cuts fall.

Critics counter that what Washington calls a spending cut is really just a lowering of expected increases in spending. That's true under the sequester up to a point. Yes, the nominal dollar amount of discretionary spending would be higher in 2022 than in 2013 by nearly $200 billion.

But discretionary spending would actually fall significantly, year-over-year, in both 2013 and 2014, the Congressional Budget Office (CBO) says. And even though spending would then start ticking upward, it wouldnt keep pace with projected inflation of about 2 percent a year let alone with population growth of about 1 percent per year, the CBO adds.

Still, most experts agree that theres fat to be cut. While private-sector productivity chugged ahead at an annual pace of 1.5 percent or better during the 1990s, public-sector productivity held almost flat, according to a 2006 study by the consulting firm McKinsey.

The question is where to cut, how to cut, and how fast.

Sen. Tom Coburn (R) of Oklahoma has made it part of his job description to document examples of waste and duplicated effort in federal agencies.

In just the past two years, the Government Accountability Office (GAO) has identified more than 1,362 duplicative programs accounting for at least $364. …