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Reinventing the Sequester

The emerging deal would allow congressional Republicans to enact savage
cuts to federal spending without having to ever specify them.

 

 

J. Scott Applewhite/AP Photo

By David Dayen

**** There's a certain type of newbie to politics
who doesn't get strong 2011 PTSD flashbacks every time the words "debt
ceiling" come up. That flirtation with default eventually ended with
something called the sequester: a series of random, debilitating,
across-the-board cuts to social services (and, to be fair, the military
as well) that were instituted after a failure to come to any agreement
on what specific measures to take to reduce the deficit. It was useful
to all parties involved, because they could fulminate about automatic
budget cuts without having to put themselves on the record for having
approved of the specifics. It was the ultimate in that classic
Washington game, the deflection of responsibility.

If the rumors coming out of today's debt ceiling talks are correct,
then we're going back to that well again, with House Republicans and
the White House coming up with a sequester-like mechanism to put budget
cuts into effect, without anyone getting their hands dirty by wielding
the actual meat cleaver.

That's the centerpiece of an emerging deal arising from negotiations
that should never have been attempted, to solve a problem that is
insoluble given the dynamics of the parties. Republicans are
budget-cutters until you ask them what they want to cut. Democrats are
defenders of federal programs until you ask them to take up the defense.
The inevitable result of this hostage crisis is likely to be a deeply
unsatisfying bundle of concessions, for the privilege of waiting two
whole years to replay this crisis all over again for another set of
shell-shocked political observers.

Republicans have been the ones announcing their optimism
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about movement toward a deal. According to Reuters
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the parties are $70 billion apart on discretionary spending, though
it's unclear whether that means over ten years or just in the first
year.

At issue is whether the baseline spending on the discretionary side of
the fiscal year 2024 budget will be at the level of fiscal year 2022,
fiscal year 2023, or somewhere in between. One idea that's been
discussed is fiscal year 2022 but adjusted for inflation. Within that,
there will probably be a set number for military spending, which seems
like it is moving toward the Biden level
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(which is still a 3.2 percent

**increase**
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over fiscal year 2023, at $842 billion) rather than the even higher
Republican number. If you need to hit an overall budget number that's
either a freeze or lower, a higher military budget by definition means a
lower nondefense discretionary budget.

And this baseline is important, because after that there will be a cap
of just 1 percent increases, magnifying whatever cuts happen over the
life of the deal. That could be anywhere from two to six years, based on
current negotiations.

**Read all of our debt ceiling coverage here**
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Nondefense discretionary, by the way, is only 13 percent of the overall
budget, forced to shoulder the entire burden of cuts, which by
definition will have to be savage. Paul Krugman has famously called
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the federal government "a giant insurance company with an army." Neither
of those things-that is, the Pentagon plus Medicare, Medicaid, and
Social Security-are subject to these cuts. Everything else is small by
comparison, but critical for education, housing, food safety, the
environment, financial regulation, and on and on.

Whatever the numbers, the emerging deal will not get into specifics.
"The expectation is that negotiators will hammer out top line numbers,"
Reuters writes
<[link removed]>,
"but leave lawmakers to hammer out the fine details ... through the
normal appropriations process in the months ahead."

Let's be real; lawmakers are not going to hammer out those fine
details. The implications of their actions are so dramatic that they
don't want to be responsible for them. An important piece from Jackie
Calmes
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in the

**Los Angeles Times** explains that Republicans on the House
Appropriations Committee canceled votes this week on four appropriations
bills, which would operationalize the topline numbers in the budget.

While Republicans claimed they needed to wait for the resolution of
bipartisan negotiations, it's clear they didn't have the votes
<[link removed]>
to pass what their budget calls for. "It is not surprising, given the
divisions in our own party, that even coming up with a bill that can be
satisfactory to all members is still a work in progress," Rep. Steve
Womack (R-AR) told Roll Call
<[link removed]>.
And these were actually the easiest appropriations bills, the
low-hanging fruit. They didn't involve the necessary cuts to funding
for Pell grants, or Meals on Wheels, or housing vouchers, or air traffic
control, or opioid treatment, or cancer research, or staffing for the
Social Security Administration.

So what happens when Congress can't reckon with the cuts they bind
themselves to in a debt ceiling deal? That's where a new innovation
comes in: the "automatic CR."

CR stands for continuing resolution. Often, when Congress can't reach
agreement on a budget, they'll pass a short-term continuing resolution
that freezes spending at the current level until the real budget passes.
According to Kevin McCarthy's pals at Punchbowl
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negotiators are devising a plan whereby, if Congress fails to pass its
12 spending bills that make up the budget by the end of the fiscal year
(September 30), then a CR would automatically "snap spending to the
agreed-upon caps."

This is expressed in terms of "incentivizing" Congress to pass the
spending bills, but clearly it

**relieves** them of having to do so. Under this deal, the cuts will go
through whether they pass a bill, and have to go on the record on
specific trims, or not. That's a similar mechanism as the sequester,
with its across-the-board spending reductions to each program affected.
It's austerity without fingerprints.

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The key to all of this, of course, is what baseline would be snapped in
with a CR. If it's FY2023, as the White House wants, the CR would just
be what every CR is: a freeze at current levels. That would be a
best-case scenario for Democrats, and House Republicans know it, which
is why I don't buy that it will happen.

If it's FY2022, the House Republican vision, then it's a deep cut.
And if military and veterans programs are exempted, as the GOP wants,
the impact on the nondefense discretionary budget is much higher. A
return to FY2022 while exempting the Pentagon and the VA would be an
effective 30 percent cut
<[link removed]>,
according to Democrats on the Appropriations Committee. If it's FY2022
adjusted for inflation, that cut is smaller but it's still real.

To mitigate this, negotiators could apply the expected savings from
adding work requirements, which really should be seen as schemes to
throw vulnerable people off federal benefits through bureaucracy.
Another way to mitigate is by undermining administration goals. About
$30 billion in unspent COVID funds are likely to be clawed back,
including a vaccine development program
<[link removed]>
that could prevent future pandemics. And some of the $80 billion in
Inflation Reduction Act funding to improve tax collection at the
Internal Revenue Service could be given back
<[link removed]>
to reduce the impact on the domestic discretionary budget.

That last bit is completely outrageous. The IRS was a functional agency
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this tax season. So we're going to undermine that, and essentially
allow tax cheats to break the law and thereby reduce incoming tax
revenue, so everyone can pretend they're cutting the deficit?

There's a whole other component to this deal around permitting reform,
which I'll have to save for later. But the most important thing on the
spending side is that no member of Congress who votes for this-and
I'm told the vote could come as soon as next Wednesday-would have to
affirmatively enact draconian cuts. It would all be done for them
through an automatic trigger. That's what will be attractive about it,
in fact. It absolves politicians from taking responsibility for the
consequences of their actions. That's more valuable than gold in
Washington.

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