The Politics of Sequestration

By Smith, Ron | Policy & Practice, October 2012 | Go to article overview

The Politics of Sequestration


Smith, Ron, Policy & Practice


Over the last several months the politics surrounding the pending sequestration of federal funding has begun to take shape. To be sure, it will be politics, and not economic considerations, that ultimately determine the fate of the sequester.

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Sequestration was included in the Budget Control Act (BCA) (1) in August 2011 as an intentionally and purposefully draconian measure to force the Congressional Joint Select Committee on Deficit Reduction to act. The BCA was the product of a compromise over how best to deal with fact that the federal government was about to exceed the statutory limit on how much it can borrow. Too many members of Congress were unwilling to support an increase to the debt limit without it being coupled to a serious initiative to lower future deficits. The result was the BCA, which established the Congressional Joint Select Committee on Deficit Reduction with near unlimited authority to piece together a deficit package designed to lower the deficit by at least $1.2 trillion between FY 2012 and FY 2021.

To ensure that the Joint Select Committee had sufficient incentive to overcome partisan divides, the BCA also included sequestration of both discretionary and mandatory spending in FY 2013 and of just mandatory spending from FY 2014 through FY 2021. The BCA established controls over discretionary spending between FY 2014 and FY 2021 via aggregate caps on annual appropriations. In the end, these sanctions designed to force Congress to draft a feasible compromise deficit reduction package failed to work. And as the January 2, 2013 sequestration deadline draws nearer, there is still no sign that this strategy is working.

As students of recent Congresses know, Congress has a history of passing deficit reduction provisions, taking credit for it, and then repealing the provisions before they go into effect. The question that has been hanging over Congress since August 2011 is whether or not this year would be any different.

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Almost immediately some members of Congress were arguing that the requirement that SO percent of the funds come from the Defense Department's budget was a serious threat to the security of the United States. This is one of the few congressional issues that does not break down by party alignment. Many Democrats, including President Obama and the Defense Secretary, have argued against allowing sequestration from going into effect. When the House of Representatives passed its budget resolution, it eliminated all cuts to the Defense Department and moved those cuts to non-defense spending programs, making the impact of a potential sequester even greater for human service programs.

Oddly enough, one of the main concerns about allowing sequestration to go into effect is that no one knows for certain exactly what programs are affected and by how much. In hearings, congressional Republicans have asked the Office of Management and Budget (0BM) for a detailed list only to be denied. OBM has argued that there is a tremendous amount of work that goes into deciding exactly how to proceed, and in their opinion, Congress is going to step in and repeal the BCA's sequestration language so there would be no need to do that work now. The dispute has escalated to the point that on July 17 the House of Representatives passed H.R. 5872, the Sequestration Transparency Act of 2012. The bill Passed 414 to 2.

Federal Reserve Chairman Ben Bernanke coined the term "fiscal cliff" in testimony before the Senate Budget Committee earlier this year. The cliff he was referring to is an economic precipice created by two events set to occur at virtually the same time. The so-called Bush-era tax cuts (2) expire at the end of the year unless Congress extends them in part or in their entirety. Estimates are that allowing the tax rates to increase would cost American taxpayers $2.2 trillion over the next ten years. …

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