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In the Nation's Interest

The Sequester: Turf Versus Grass

By Joseph Minarik

Just about everybody is familiar with the bureaucratic concept of “turf.”  As in, “That’s my turf.”  In other words, stay off.

However, experience indicates that there is an associated bureaucratic concept which is much less widely recognized: “grass.”  As in, “That’s my turf – so don’t you tell me that I need to cut the grass.”

Both “turf” and “grass” are at play in the current high-level dispute over the sequester of federal spending.  It is worth a review of the bidding thus far.

The sequester was written into law in the debt-limit deal of August 2011.  It was intended to be a fail-safe device in case the so-called “Supercommittee” failed to achieve its goal of $1.2 trillion of budget savings.  The Supercommittee duly failed.  The sequester was postponed from the beginning of this year to the beginning of this March – i.e., Friday.  The two parties in Washington argue over whose idea it was, who voted for it, and whose intransigence is causing it now to appear inevitable.  Those questions may be of academic interest, but not much more.

The importance of Who Shot the Federal Government As We Know It is limited because there is little dispute that the sequester is a Bad Thing.  Oh, there are some who say that there is a debt crisis going on, and so we must cut something.  But just about everyone recognizes that the sequester will not solve the problem.  More specifically, even those who would accept the sequester with the least remorse understand two facts:  First, if we do not have the sequester, the federal government’s finances will explode without fundamental reform of health care.  And second, if we do have the sequester, the federal government’s finances will explode without fundamental reform of health care.  The sequester will only buy time.  A little.

So the time we waste assigning and re-assigning blame is not available to fix the problem.  Let’s think about the problem – and in particular, why it is so hard to get Washington to focus on a solution.

There has been one throwaway vision of the sequester that strikes me as totally wrong, but discussion of which is enlightening.  That notion is that a mere 8 or so percent cut is no big deal.  Every big organization can find 8 percent to save, and any management consultant can find it for you.  Therefore, the sequester is nothing to be concerned about, and all of the fussing over it is mere political dramatics.

This view is quite uninformed, on two fronts.  First, it may even be true that a management consultant can find 8 percent savings in any big organization.  But how many times?  Remember that the August 2011 debt-limit deal that created the sequester included new statutory discretionary spending caps.  The sequester, which no one originally intended actually to take effect, was in addition to the reductions embodied in those spending caps.  With the spending caps, but without the sequester, total fiscal year 2014 discretionary spending adjusted for inflation will be below its level of 2009, and almost 16 percent below its peak level of 2010.  But with the sequester, inflation-adjusted 2014 spending will be below its level of 2005, and almost 21 percent below its 2010 level.  And in subsequent years, discretionary spending is slated to fall farther and farther behind past levels.

In other words, the law pre-sequester was enough to give the hypothetical management consultant a workout.  It is too much to assume that the sequester is a no-brainer because it by itself is only a small percentage cut, without considering the substantial cuts that were enacted just before – and have not yet been implemented (and may prove too deep ever to be implemented).

Now, to be sure, the 2010 spending level was swollen by the anti-recession “stimulus” bill, and so it provides an uncertain yardstick.  But at least some of the federal government’s discretionary spending needs to maintain scale with the size of the population and the amount of economic activity ongoing, not to mention the willful threats against our security.  Examples of needs that grow in step with the economy or the population include such face-to-face services as are provided by Social Security case workers, Veterans health care physicians and nurses, and law enforcement, and also economy-enabling investments such as in infrastructure.  Yes, we should have productivity improvement, but we also face network complexities as the society gets bigger, and backlogs in the repair of old infrastructure.  (This is a topic worth a lengthier discussion in a future post.)  It is highly optimistic to assume that a 2005-sized government can meet 2014-sized needs.

Which takes us to the second weakness in the “you can cut 8 percent from any large organization” argument.  Because the sequester was intended to be a deterrent rather than a policy, it was written as a blind, across-the-board cut at the most granular level.  Thus, government agencies are not empowered to “find” savings.  They are required, by law, to cut every activity – worthy or unworthy – by the same percentage.

Some see this bizarre legislative language and believe that they have hit upon the universal sequester solvent:  Let’s just give those program managers the authority to hire their own management consultants and move their own money around to implement the sequester efficiently.

But this is where we suddenly find that the story has passed through the looking glass.  The Congress for centuries has jealously guarded its power of the purse – especially from the executive and its nameless, faceless “bureaucrats.”  Now, some in the Congress are eager to cede authority to those same bureaucrats to reallocate funds from office to office.  Again, appearances can be deceiving, because the White House is receiving mail from Capitol Hill asking it to steer spending reductions away from the congressional districts of the senders.  But that qualification aside, the legislature is behaving far from type in washing its hands of fundamental decisions that are reserved to it by the Constitution.  It is “turf” versus “grass” in vivid green:  The Congress refuses to mow the grass that grows from its own treasured turf.

And to take the point one step further:  Presumably, if it could be motivated to act, the Congress would consider reallocating funds among departments – say from the Department of Education or Labor or Housing and Urban Development to the Pentagon (or vice versa).  But delegating transfer authority to agency heads stops well short of that degree of rational budgeting in tough times.  With departmental transfer authority, the money moves only within each department, not from the departments that are less stressed to the others.

Why is the Congress so willing to hand off its traditional, even constitutional, authority?

There are at least two possible reasons.  One is that the budget issue has become so difficult that it is terminally frightening.  It is like a high school baseball game where the team needs a pinch hitter.  Looking down the bench, the coach sees only a line of sweaty faces, with each youngster terrified both of failure and of the opposing pitcher’s fastball.

There is a second possibility, which is at the opposite end of the emotional spectrum:  It is likely that most Members of Congress, from both parties, believe that they will win politically if they hang tough and refuse to negotiate seriously, and allow the sequester to occur.  For some Republicans, the sequester is spending reduction – and spending reduction that the President has said clearly that he does not want to happen.  So forcing the sequester is both substantively rewarding and humiliating to the President.  Many Democrats probably believe that hanging tough avoids what they see as intolerable entitlement spending cuts, and also before long will demonstrate that the American people really want the federal government services that sequester will visibly disrupt.

But how can both sides win through stubbornness and gridlock?  The answer is gerrymandering in House districts, plus some strong one-party states with lopsided Senate elections.  The vast majority of seats are absolutely safe – from the other party.  The greatest risk to each of those Members is a primary challenge from the ideological extreme of his or her own party.  So they refuse to negotiate with the other side, give away nothing, and as a result are about as safe as they can be from a challenge from the extreme.  The only loser is the country – especially if it falls over the edge into another colossal recession.  And for those who argue that the sequester is too small, or will bite too gradually, to cause a serious downturn:  Just remember that a recession will occur if enough people think it will occur.  Federal government irrationality, plus a crazy election in Italy, plus one or two other little things might do the trick.

So that is where we are:  Too many Members of Congress welcome the sequester because they see the annual appropriations as a bottomless pit of savings, even though they certainly do not want spending cuts in their districts, and the pre-existing law’s significant spending cuts have not yet been implemented (and may prove too large to be implemented).  Too many Members believe that they personally, and their parties, will profit from a standoff.  Many in the Congress appear willing to hand off their power of the purse – and necessarily, along with it, their obligation for oversight – to duck the responsibility of governing.  And all of this goes on in a shaky and vulnerable U.S. economy, nested within a shaky and vulnerable world economy.

But apart from that, everything in Washington is doing just fine.