Sequestration Hype
The Obama administration is promising massive cuts in public-facing services in the face of minuscule "cuts" to the budget.
The automatic spending cuts known as the sequester are monumentally stupid–a self-inflicted wound designed by Washington politicians to force themselves to make hard choices that has thus far not succeeded in that. It was a poison pill never intended to be taken. The massive cuts in the Defense budget, rendered more stupid by being across-the-board instead of targeting unnecessary boondoggles like the F-35, are particularly dangerous.
But the Obama administration is overplaying its hand by cutting public-facing services in the face of minuscule ”cuts” (really, slight slowdowns in the rate of planned growth) to other programs. A case in point:
HuffPo (“Ray LaHood Warns Sequester Will Cause Air Travel Delays“):
Outgoing Transportation Secretary Ray LaHood has a frightening message: Air travel could get worse.
The Obama Cabinet member and former Republican congressman made a surprise appearance at Friday’s White House press briefing to warn that the looming automatic budget cuts set to go into effect on March 1 could lead to even longer air travel delays.
“Travelers should expect delays of up to 90 minutes at peak airports during sequester,” starting on April 1, LaHood said. “It’s going to be very painful for the flying public.”
The sequester’s across-the-board budget cuts will slash $600 million from the Federal Aviation Administration, which will in turn have to furlough air traffic controllers. More than 100 air traffic control towers will be shuttered, LaHood said.
He said airlines would accomodate the cuts by providing less service. “We expect that they will change their schedules and cancel flights,” he said.
But here’s the thing: The DOT budget for FY2013 is$74.488 billion dollars.
The FAA’s portion alone is $15.172 billion dollars, which breaks down thusly:
- Operations: $9.718 billion
- Facilities & Equipment $2.85 billion
- Research, Engineering & Development $180 billion
- Grants-in-Aid for Airports: $2.424 billion
You’re telling me that the only way to absorb $600 million in cuts is to furlough air traffic controllers and shut down 100 air traffic control towers? That strikes me as pretty obvious grandstanding. The ops budget alone, which is what pays for the air traffic control system, is $9.718 billion. If the entire $600 million cut were taken out of the ops budget—which it wouldn’t be—you’d still be left with $9.118 billion, or 93.826 percent of the non-sequester budget. If the $600 million cut was taken across the board—as it should be—only $384.3 million of it would come out of operations. That would still leave 96.05 percent of the non-sequester budget for air traffic control.
So, brace yourselves for a 3.95 percent decrease in efficiency.
I deal with IT budgets year after year. In 2009 I had to cut 30%, which hurt but when pressed to find money so I could keep enough people on there are creative ways. We bought some server rebuilds instead of new, kept some printers for a few more years than accounting had planned, used some open source tools to accomplish what more expensive MS tools did. Yes, I had to loose 2 staff in a team of 15, but one was way over paid. I find it hard to believe 10% is that big of a deal, especially for defense.
I’ll try to dig up the link but there was an interview with the OMB director yesterday that basically said that, in line with how the 1991Sequester went, the language of the bill is interpreted to give very little discretion. Every “program” has to be cut and for service-heavy areas, that jeans furloughs or layoffs. No Administration discretion to move money around between programs.
Found it: Here’s how you run a sequester: ‘Scrape five percent less poop’
@SKI: But the cut here is 3.95 percent. Even if there’s no discretion, that’s minuscule. It means that someone working 40 hours a week instead works 38.42 hours. Or that instead of 100 workers you have 96. That may be inefficient and stupid. But it shouldn’t create chaos at the airports, either, unless the administration is deliberately trying to sabotage public services.
No doubt there is some grandstanding taking place with Mr LaHood’s dire warnings. I also believe the Obama Administration is engaged in a pre-emptive p.r. campaign to shield themselves from criticism should the sequester activate.
However, not all organizations or departments are created equal, and while some agencies might be able to manage a sequester cut with minimal effect, there are others that really can’t without diminishing efficacy. I teach at a public high school, and after years of budget slashing, a 5% cut could not be done without a noticeable loss in quality. I’ll add that several potential options of cutting aren’t allowable due to law or regulation.
That’s why I’ve been pitching a mandatory “cut from the top” approach to spending reduction. In the Pentagon, for example, the best way to trim the budget is by reducing the number of general officers.
The smaller the cuts in sequestration the better. In fact, I hope it’s a reduction in the increase in the rate of spending and not real spending reductions.
Smaller is definitely damage control.
I definitely think this is grandstanding-the world is going to end if we cut a penny blah blah blah crap.
This isn’t even a cut in the true sense. Its like calling a raise you didn’t get a pay cut (sure you don’t like the fact that you didn’t get a raise you were hoping for, but you didn’t get a cut in your pay either).
I also agree with Dave Schuler-cut from the top. Most government organizations (shoot even the private ones) tend to have bloated bureaucrats who can take pay cuts and I am willing to be some of those positions can be eliminated without harming the integrity of the service provided.
In the other thread we talked about Congress mandating that the Army buy more tanks, essentially at the same time as they say that the sequester should cut army spending off the top.
If that is the pattern, then yeah, I could see stupid and self-defeating measures being the norm for the sequester.
The big spending is both in a long pipeline, and often mandated by detailed spending bills.
(I’m sure the sequester does not allow the FAA to say reverse “terror” spending or to delay a terminal construction named after some former Congressman.)
@James Joyner
Your post reminds me of an FP article from last year, for some reason:
http://www.foreignpolicy.com/articles/2012/11/30/quagmire?page=0,0
Hmmmmm— it appears the myopic have forgotten that the govt has been on a hiring freeze for at least 5 years. You think workload and inflation hasn’t decreased any surplus productivity that that time? Since its taken as gospel that the gov’t should operate like the private sector, funding cuts are going come to come out of the biggest cookie jar–labor. If you roll back equipment, you decrease the productivity of everybody anyway. Its more efficient to have less people than it is to have less equipment AND less people. In the case or the FAA, the equipment is mission critical, it nor investigations can’t be cut–so employees it is. If the sequester had happened five years ago this article might make sense. Now that the gov’t is staffed for 2008 work levels–it gives me a chuckle…the kind I get when the doors on a VW bug open and like…35 clowns get out of the car.
I guess latching on the musings of bean counters is good policy, since they proved their worth in ordeals like vietnam, QE1 &2, etc.
@Just Me: Doesn’t matter what you call it—pay cut or not. In our economy if your income isn’t increasing–inflation is cutting your spending power. In those terms yes—it is a spending cut over the 10 years–a significant one. How much gov’t do you think we could fund with the 1993 budget? Or better yet, how much of your current lifestyle could you afford with what you brought home in 2001 assuming no pay raises?
@Just Me:
What Dave is really championing are planned cuts. I think we should go further with that, and plan by program review … but both our dreams are moot at this point.
The point of the sequester is that nobody has to decide cuts in Congress and all previous spending bills by Congress remain in effect.
It is kind of ass-backwards to blame the President because that setup leaves so few options.
@James Joyner:
Huh….maybe the administration is in this case. But then again, “deliberately trying to sabotage public services” is kind of a game we play in modern-era politics, innit?
Don’t hate the player. Hate the game.
Oh the comedy that will be Repub town hall meetings when all the Gov’t dollar multiplier money dries up for the “rugged individualists” should this go down. Cant remember what the multiplier is but I think its 6-1. Youtube is going to be on fire! Then perhaps we can wake people up to the reality that money is no longer what they thought it was back in the 70s before Nixon floated the dollar. When debt is retired–it decreases the money supply to the country as a whole. I certainly am no fan of debt-based currency but I DO know you have to play the game in front of you. Fiat currency is not a store of value—it is licenses to engage in economic activity. The sooner the boomer generations and the generation after wakes up to that–the sooner we can get politicians refocused on sound money policy instead of taking opposite sides of the same dumb argument like they are doing now.
@James Pearce (Formerly Known as Herb):
I’m not sure which is the game. It might be a meme game, that “the administration is deliberately trying to sabotage public services” is made up from whole cloth, by his political opposition.
The sitcom joke has been “I blame Obama!”
Well, that doesn’t mean it can’t still be tried.
Any time someone wants to cut local school budgets, the school administration announces the first thing to go will be the popular football and basketball programs. If the local sheriff is threatened with budget cuts he announces he’s going to have to release hardened criminals into the community. SOP, Standard Operating Procedure. To fight the cuts you announce the most unpopular response.
Every time GOPs push something stupid, like not raising the debt ceiling, they say it’ll be OK because Obama can somehow make it work. Well, Obama’s not a Republican. Why should he try to make stupid Republican plans work?
Slashdot has an article claiming that an 8% cut at the Pentagon should be easy, because the F-35 program is so messed up. They imply that the administration, under the authorization of the sequester, can just cut or delay it.
Can they?
Or would this be another example where Congress set program funding, and did not give the Executive Branch authority to reverse it in the Sequester?
This really is an excellent main blog post. Alas it’ll fall on deaf ears. Sigh. Spending money we don’t have not only is de rigueur it’s an addiction.
Of course as far as missed elephants there’s also the absurd accounting fiction that Social Security and Medicare somehow don’t count towards the budget. “Lock box.” Riiiiight. As if when those “trust funds” run dry that somehow those entitlement dollars will be generated from magical unicorn printing presses with no untoward effects whatsoever.
The future prospects are grim. The Feds spend a trillion more each year than they take in. And it’s tough to grow a viable tax base when large swaths of your college and university graduates walk the stage and then instantly move back home to live with their parents, not even to search for work. Real wage and income growth are non-existent. We already owe 16 trillion dollars. Higher inflation and interest rates are foregone conclusions. It won’t end well.
The sequester does not actually reduce spending year-over-year, it reduces spending that was forecast; actual year-over-year spending still increases. I would dearly love to see SecTrans LaHood presented with specific numbers, e.g., “Last year you spent $$$ on air traffic controllers, and assuming the sequestration goes into effect, you will still be spending $$$ + x. How is it an increase in year-over-year spending will still result in furloughs and 100 towers* being shuttered?
* 100 towers shuttered? Seriously? Pilots everywhere should be jumping all over that particular number, it’s simply not credible.
@BreakRight Mike Tierney:
I don’t fly in small planes much, but I have landed at fields without towers. Pilots call over to a different, manned, field which manages approach and take off remotely. Presumably these 100 are a list of low traffic fields that can be shifted to remote management.
Given the laws and spending bills in place, that may be one of the few options available.
Basically the argument against Obama is an argument from no data.
It is “surely there must be other things he can do!”
That’s a demand that someone else prove your case for you, and provide those “other things.”
@James Joyner:
Completely the opposite. If the Administration was attempting to sabotage public services it would be double-dealing for greater spending cuts, not attempting to bet away from Sequestration.
@john personna:
Well, let’s just grant that 100 towers may be overstating it. It sounds like a round number, and it’s not too out of order to think LaHood was rounding up.
So it may, in fact, be less than 100 towers. To be safe about it, let’s just say it’s more than one. (Based on how most people round up, I’d even say it’s more than 50.)
We can play the old “liar” game and say to LaHood, “You said 100 towers, but actually it’s only 76. You’re a LIAR!”
Or we could say that more than 1 tower is closing, possibly more than 50, not because of need, but for lack of will to fund it. Then we can sleep smugly that Ray LaHood lied and the Republicans remain blameless.
(Or maybe we can be like the “Tea Party” and blame the Republicans, but double down support for them anyway. But that’s not very intelligent…..is it?)
The sequestration law doesn’t allow the cuts to be targeted in a sensible fashion. You have to cut the same x% from each line item at the program level whether it makes sense to do it that way or not.
@john personna: Most of the fields in the country, and indeed, most of the fields I flew in and out of, were uncontrolled (for non-pilots, uncontrolled fields are assigned a universal comm frequency – pilots operating at that field simply set their radio to the unicom freq for that field, and let everyone else know where they are in the pattern).
There are undoubtedly some towers which are underutilized, and probably should be shut down, but are kept open due to local political pressure or some such – prime example would be JST, the airport seemingly built for the late John Murtha (D-PA); in spite of extremely light traffic, it still hosts an FAA tower. On AOPA.org’s lookup, I found the following: Tower Hrs: MON-FRI 0600-2300, SAT-SUN 0700-2300. If this tower were to be shut down, no great shakes. But LaHood obviously wants to give people the impression that towers at fields like IND and CMH would be closed, which is laughable.
@Stormy Dragon:
That’s true, although there’s apparently tremendous flexibility at what constitutes “program level.’ Regardless, we’re talking a 3.9% cut, not a 39% cut. The result should be inconvenience, not chaos.
@James Joyner:
… and that’s exactly what they’re doing. They’re going to be furloughing employees one day a week for 22 weeks. “Furough” doesn’t mean “layoff”.
And don’t foget: the fiscal year started October 1 of last year. So they only have six months left toreduce their budget by x% for the whole year, which means they have to cut 2x% now. And also that an employees hourly wage rate is often only about half of their total compensation, so you have to actually cut 4x% from that since you can’t cut what is being paid for their insurance, pension, etc. Now we’re up to a 16% cut.
How did we determine that, after all fixed, previously contracted, and mandated spending, the impact on labor hours was only 4%?
The cuts have to come out of discretionary budget, a quantity that even the executive may only know imperfectly.
It gets into accounting systems and workflow. You may need to know something (“what can we cut fast”) that itself takes millions of dollars to discover!
Keep in mind, the cuts have to come from discretionary funding, things that are congressional line items, like x dollars for y airport can’t be cut. I don’t have time to look at the FAA’s budget, but the grants to airports is probably going to fall in that and I bet a large chunk of the research dollars would also be required to be spent as is, which means the only way they can hit the target is by dropping head count. Looking at the raw numbers is going to give you a distorted view of the impact.
@john personna:
The F-35 is 70% over budget and is expected to cost $400 billion. The Navy and Marine versions of the jet cost about $100 million more per unit than the F-22, in spite of the fact that the F-35 was supposed to be the low cost alternative to the F-22. The program should die but won’t because that’s the way Congress wants it.
@BreakRight Mike Tierney:
That may be true, but wouldn’t it be great to have someone (a Republican most likely) make the argument that some of these towers are underutilized and should probably be shut down? Shut it down now for the sequester, they’ll be back open once the money spigot is turned back on.
This is perhaps the dumbest way of getting cuts. So it’s no surprise it’s the one that Republicans prefer.
@Stormy Dragon:
And we wonder why public employees join unions…..
Or to put it another way, agency has a 1 billion dollar budget and has to cut 10%. So they have to cut $100 million. But they have congressional mandated programs that eat up half of the budget. So it’s no longer a 10% cut, it’s 20%. Out of the $500 million left over, half of it is fixed costs (building maintenance, critical systems, etc) that can’t be cut quickly. Now we are up to a 40% cut. And they have to do it quickly, how to you slash expenses quickly? Head count. The sequester is going to slash bodies, it has to, it’s the only way to do it over the short term.
Long term savings require time and planning. Consolidating operations. Shuttering excess office space. Eliminating programs that are wasteful or not needed (F-35, I’m looking at you). The sequester does not allow for that type of reductions.
The more I think about this, the more disappointed I am in your initial analysis, James. I usually like the research and thought you put into your posts, but this time not so much. You went for the easy out on this. You looked at the overall numbers and didn’t dig into what they actually can cut and what they can cut quickly. I normally expect better of you on this type of thing.
Add James to the list of those who want government services but don’t want to pay for them. And add all of us to the list of those who’ll continue suffering in an economy hobbled by misguided deficit fetishits.
@Stormy Dragon: That’s a fair point; I hadn’t factored in the part of the allocated funds already spent.
@David from KC: This is being presented as an across-the-board cut. The only thing I’m aware of that was exempted was defense personnel (i.e., troop pay).
@rudderpedals: Negatory. As noted in the opener, I think the sequester is stupid. And I’m not sure that the whole austerity movement isn’t stupid. I’m just wondering why we’d need a massive cut in services when the budget’s essentially being cut to last year’s levels in most agencies. (Not true for DOT: They already took a modest haircut without the sequester.)
@James Joyner:
Imagine you have a contract to deliver paper and toner to division X in department Y. Imagine that the executive branch, ten levels higher in the bureaucracy, says to department Y, cut 5%!
Think what it would cost to cut that paper delivery by 5%. Someone would have had to dig into division X budgets, change each line item, contact you, have you change your delivery, and your billing.
The cost of the change would easily exceed the size of the decrease in purchase.
And it’s even worse than that. If you really wanted to do it as even as you could, you’d have to iterate. You’d have to dive into division X accounting to see if the paper contract was month-to-month or yearly, and even had that flexibility.
It’s all a mess, and the Republicans are running a meme campaign, one which begins “I blame Obama!”
Basically what I’m saying is that you can’t use department resources to carefully plan department cuts, because it becomes self-defeating. People aren’t working on their mission. They are re-working their budgets. Every hour spent planning is an hour cut from mission, but still paid for, out of the budget-to-be-reduced.
@ James Joyner
The cuts to mental heath services I am hearing about are not going to be “inconvenient” they are going to be a disaster.
https://secure2.convio.net/nmha/site/Advocacy?cmd=display&page=UserAction&id=731
Community mental health services in the high wealth area I live in have been cut to the bone. In poorer parts of the bay area, they have been cutting bone for a while now.
Make no mistake James, people will die if these cuts happen. Thats not an “inconvenience” if one of them is a member of your family. Shame on you.
4 percent of the operating budget is a big deal. Fact is, the FAA’s operating budget is one of those budgets where the unspent money goes away the next year. Therefore the budget is already packed to the limit. Cutting 4 percent inherently means cutting 4 percent of your operation. But as pointed out, the cuts can’t be implemented immediately and they have to be done by October. So the cuts have to be even more dramatic. So it’s more like 10 percent of your operation
There is damn near 700 air traffic facilities that get FAA money if you count all TRACONs as separate facilities (which you should because the approach controls will still have to exist somewhere even of the towers disappear). The fact that 100 are on the chopping block shouldn’t be that crazy a concept.
But even then, I’m sorry Joyner, but incredulity isn’t an argument.
It’s actually been infuriating. I’m an air traffic controller, in NATCA negotiating these things, yet I still get people trying to tell ME that it’s all just one big bluff, the FAA doesn’t have to do all this, etc. etc.
@James Joyner:
For your response to rudderpedals…
Did you actually look up to see if there are more planes utilizing the air traffic system this year vs. last year? Or are you just being incredulous, absent data again?
@john personna: They are not , if you look at the list they are airports that have had major congressional investigations when there were equipment problems
@BreakRight Mike Tierney: please get your facts straight JST is not a contract tower and does not have FAA controllers. It is manned by the military with military controllers
I can give a data point from the private sector. Last year a Fortune 500 company I am very familiar with was in danger of missing its numbers by less than two percent. To avert this the personnell cuts were very significant, 100s of people, perhaps over a thousand total. And in the last few months there were highly paid people who were literally looking for things to do inside the company. For example, certain advertising budgets were zeroed out for the remainder of the year so there were people in those departments calling colleagues to see if they could use a hand. . Remember, outsourcing has been corporate wisdom for a couple of decades now so most companies (and the government) are heavily dependent on outside contractors to do essential work, and they won’t work without being paid. So if those 100 towers are administered by outside contractors they may need to be eliminated.
I have no doubt the administration is painting the blackest picture possible, but the effects of an emergency 3-4% cut are far more dramatic than a simplistic view would predict.
@gman: Mea culpa, gman – my apologies, and thank you for the correction.
As per gman’s observation, I must withdraw JST as an example (and will attempt to edit my original comment to note same). I will, however, let stand my belief that SecTrans is attempting to give the average American the impression that towers will have to be closed at significant airports such as Indianapolis and Port Columbus.
@James Joyner:
Well, that’s exactly what is happening. Flight delays up to 90 minutes for the busiest routes ARE inconvenience. What makes you call it chaos?
Moreover, it’s impossible to spread the 4% cut evenly across all expenditures. You can’t tell your equipment lessor that you’re only going to send in 96% of next month’s bill. And you can’t use 4% fewer paper clips unless you’re processing 4% less paper. Consequently, most of the cuts have to come in labor, which can be finely calibrated. This means you’re going to cut labor much more than 4%.
How many enterprises out there can withstand an immediate staff reduction significantly greater than 4% without substantially reducing services? Probably zero.
@James Joyner:
How on earth can you not be sure about this? There are three significant economic problems facing this country – lack of economic growth, severe income inequality and unsustainable public debt. Austerity, while promising to reduce the debt, actually exacerbates all three of these problems.
We have real-world data that prove this and yet you’re still not sure. I guess this is why you admitted the other day that most people in the GOP have an unrealistic understanding of how the economy works.
James, what you have to realize is that the operations budgets of a majority of government agencies is salary and benefits. We’re already taking a big hit in Border Patrol, but I look at it as the sacrifice we have to make to do our part in this budget fiasco. My pay has been cut 5% already, and I anticipate it will be cut 25% before too long.
Hopefully, the rest of the public will remember that when their maligning us federal workers as leeches sucking off the government teat.