By the end of the week, everything changes. Severe spending cuts will unleash waves of devastation across the U.S. Picture air travel snarled. Meat inspections curtailed. National security imperiled. Seventy thousand children booted from Head Start programs, 10,000 teaching jobs jeopardized, disability payments delayed, aid withheld from needy Americans and foreign governments perched on the brink of chaos. Hundreds of thousands of jobs could be lost, and the fragile economy knocked into a tailspin.
This is the nightmare that would unfold, according to Barack Obama and the heads of federal agencies, if Congress can’t forge a deal to evade sequestration, the $1.2 trillion package of spending cuts over the next decade that is set to kick in March 1. The sequester was designed to be so disastrous that would it would force Washington’s warring factions to the bargaining table. But what was once an unthinkable result has come to seem inevitable. This time there is little hope that dealmakers will swoop in with an 11th-hour reprieve. With the deadline looming four days away, the question enveloping the capital is not whether the sequester will happen, but rather how bad it will be.
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As usual, the two parties have crunched the data and come up with wildly divergent conclusions. If the White House envisions economic calamity, many Republicans are treating the sequester more like the Mayan apocalypse. They consider the prospect of lopping $85 billion off the $3.6 trillion federal budget — about a 2.4% cut — to be a good start. A “pittance,” Kentucky Senator Rand Paul said. If you ask the GOP, the White House’s dire predictions are designed to scare the public and pressure the GOP to acquiesce. And so, when they aren’t trying to pin the policy on Obama, Republicans are working to cast the cuts as modest reductions to a bloated budget.
“No one should be talking about raising taxes when the government is still paying people to play video games, giving folks free cellphones, and buying $47,000 cigarette-smoking machines,” wrote House Speaker John Boehner, who not long ago described the sequester as a “meat axe.” Jeering Obama’s doom-and-gloom tone, the conservative group Crossroads GPS released an ad that juxtaposes Obama’s dire predictions with menacing zombies, mushroom clouds and croaking seniors, to the beat of a whistling tune.
Which side is right? We know the sequester would wreak serious damage if allowed to run its course. But its immediate impact could be mild, and almost nobody in Washington knows how it will be managed before Congress musters the will to replace it. That includes the heads of federal agencies, who are warning of closed national parks, 90-minute flight delays and unemployment checks trimmed some 10%. The number of people in the federal government with intimate knowledge of what will happen if the sequester takes effect on March 1 is likely tiny — perhaps as small as three, says Barry Anderson, a former senior official at the Office of Management and Budget (OMB). Anderson knows how complicated the process is to predict because he helped direct the last sequester, in 1991. “I’ve been in therapy for the past 22 years,” he jokes.
According to Anderson, OMB has discretion over how to apportion the roughly 5.3% cut to each affected nonmilitary program and 8% hit to each defense program. “The agencies have nothing to do with this,” Anderson says. “It is OMB’s choice.” Deciding how to spread resources to minimize the pain is a tricky task, not least because government agencies have different burdens at different times. The Department of Education, for example, disburses many grants in the summer, so it is partially inoculated from early damage. At the other end of the spectrum, the Department of Defense has already issued furlough notices to 800,000 employees, and the Navy has announced plans to dock stateside an aircraft carrier that had been bound for the Persian Gulf.
“You’ll see variation. In some cases, you’ll see immediate impacts,” OMB federal controller Danny Werfel told reporters on Feb. 8. “And in some cases, agencies will work out those changes to their programs and their structures over time. So there’s no easy answer to say what the world is going to look like on March 2.”
Some experts say it may not look much different. “My educated guess is there will be very little pain in March,” says one nonpartisan budget analyst, who requested anonymity so as not to undermine the bargaining position of an employer. Agencies are required to give at least 30 days’ notice before furloughing federal workers, which means that staffing reductions won’t begin until April. Cuts to critical programs can also be back-loaded to limit the immediate impact. The sequestration order, written as part of the Budget Control Act that averted the debt-limit crisis in 2011, requires an across-the-board haircut to each affected “program, project and activity,” but different line items can absorb the hit at different times. Still, Werfel told reporters during a Sunday conference call, agencies have “limited flexibility” to structure the cuts in a way that safeguards their mission. “When you’re taking an $85 billion cut over a seven-month period, there is no road map of flexibility that allows you to eliminate many, many of the disruptions that are going to occur,” he said.
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There is no question that the sequester would wallop the economy if it remains law. The nonpartisan Congressional Budget Office estimates sequestration would cost the U.S. some 750,000 jobs by the end of 2013. A report by Stephen Fuller, a George Mason University economist, estimated the policy could cost more than 2 million jobs and raise the unemployment rate by 1.5%. As the March 1 deadline creeps closer, the Administration has slowly begun to detail the gruesome litany of specifics — from the $310,000 hit to an Arkansas program that provides meals for seniors, to reductions in trash pickup in Yosemite, to the 4,180 kids in Georgia who would forego crucial vaccines, to the $1.1 million in law enforcement grants Texas would relinquish.
But while the perils of the sequester are certainly real, the March 1 deadline is somewhat fungible. Even if the sequester kicks in, its impact could be mitigated if Congress rewrites the law as part of a deal to avert a government shutdown by March 27, when federal funding is scheduled to run dry. “That could be the vehicle by which Congress resolves the issue, stops sequestration, and gets the government back on course,” says Scott Lilly, a former appropriations staffer who is now a senior fellow at the left-leaning Center for American Progress. “That would be the optimistic scenario, that somehow these knuckleheads come to their senses within that period of time.”
The sequester’s cuts could be structured to assume that happens, but it would be a big gamble. The two parties are once again at an impasse. Obama insists that any deficit-reduction package crafted to replace sequestration contain new tax revenues. Republicans, who were forced to raise taxes on high earners as part of the fiscal cliff deal on New Year’s Eve, are unwilling to do so again. And so, perhaps with the knowledge that the worst of the pain is unlikely to strike right away, the two parties have skipped negotiations and swapped salvos and hashtags instead.
Obama has launched a campaign-style tour to convince the public that Republican intransigence is to blame. House Republicans think they can pin the policy on the President by noting that the idea originated in the White House (even though it was devised as a mechanism to resolve a debt-ceiling crisis manufactured by the GOP) and reminding voters that they have twice voted to replace the cuts (although those bills expired at the end of the 112th Congress). “The White House needs to spend less time explaining to the press how bad the sequester will be and more time actually working to stop it,” said Boehner spokesman Michael Steel.
The conventional wisdom is that Obama, who enjoys far higher approval ratings than his opponents, has the stronger political position. A recent Pew Research Center/USA Today poll indicated that roughly half the public would blame Republicans, compared to the 3-in-10 who would blame Obama. If that happens, it might bolster White House efforts to rekindle a grand bargain that includes tax and entitlement reforms.
But because it’s so complicated to forecast the sequester’s impact, it’s impossible to predict the political fallout of an arcane policy that few people understand. The only safe bet appears to be that a policy specifically engineered to be terrible is poised to take effect. “I can understand why the American people would think that these things aren’t actually going to happen, because the Republicans have pushed us to the brink on three or four occasions in the last couple of years,” said White House communications director Dan Pfeiffer. “Our hope is that we’ll be able to come to a solution and avoid [the crisis] this time, but nothing the Republicans are saying right now suggests that by Friday, they’re going to change their position.” If that doesn’t happen, we are about to find out just how bad the sequester will be.