The sequester is just as destructive as we thought

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Remember the sequester? When seven weeks ago the deadline to find a federal budget compromise came and went, there was much handwringing in Washington. In the event that no agreement was found there were to be cuts to public spending so severe and painful that no one would dare fail to agree. To deter Republicans from holding out, half the immediate spending savings of $85.4 billion was to be found from the defense budget, and, to ensure Democrats would work to find a deal, half from annually funded federal programs. Despite these encouragements to fiscal discipline, the March 1 deadline came and went.

For weeks the word “sequestration” was used so often that commentators and their readers grew sick of it. The headlines moved on. But quietly, without making much news, implementation is well under way and proving just as dire and destructive as advertised. It is hard to fully comprehend the impact of death by a thousand cuts and where they fall. This week the sequester broke surface when it began affecting air travel, causing long delays at airports, which is to be expected when you send 1,500 air traffic controllers home without pay. One in 10 controllers will stay at home on unpaid leave every day until October. With the vacation season looming, crowded airports full of frustrated passengers will become commonplace.

Many cuts have an impact less obvious than gumming up airports. Carnegie Mellon University in Pittsburgh, which relies upon federal sources for 86 percent of its research, is losing $7 million between now and September, while the University of Pittsburgh will lose $26 million, mostly from health research. All other research universities tell a similar story. This fiscal year the National Institutes of Health, the largest federal funding agency for many schools, like the University of Minnesota, is spending $1.5 billion less on research.

Postponing medical research sounds victimless, but it is not if you are among those helped when a new drug comes onstream. It is impossible to list those who will miss new treatments by a year or so but will continue suffering, or even die, as a consequence of the delay. More easy to picture are the thousands of cancer patients being turned away from hospitals because of the cuts. For a cancer center on Long Island, that means not administering the most expensive drugs and telling one-third of its 16,000 patients on Medicare it will no longer treat them.

Air traffic controllers are not the only federal employees being told to take the week off. Staff at the Smithsonian in Washington, which has lost $40 million of its federal grant, and at the National Zoo have followed suit. Managers at the oo stress that the animals will be unaffected, as well as the number of exhibitions, but staff vacancies will not be filled. One rare cut to raise a laugh was that IRS workers are also having to take unpaid leave. Funny, that is, until you realize that one of the reasons for the furlough and the public spending deficit is that not enough Americans paid the taxes they owe.

More troubling for the maintenance of civilized values are the cuts to the police looking after our national parks, which means partial closures and less safe parks, and the truncation of justice entailed in the $350 million removed from the federal court budget, which means fewer public defenders, the state-funded lawyers who help those who cannot afford to be represented. At least 2 million unemployed will be paid 11 percent less in benefits for the rest of this fiscal year.

The trimming of defense spending has already made the world a more dangerous place. There have been many specific decisions taken to reach the $450 billion reduction on defense spending over the next nine years. Routine training of forces has been cancelled, the USS Harry Truman, an aircraft carrier due to station itself in the Gulf, remains in port in Norfolk, Virginia, combat aircraft will not be maintained, and so on. Defense Department workers are being put on a furlough: Civilians can expect to lose one day’s work (and one day’s pay) a week for 14 weeks. As Oklahoma Senator James Inhofe sees it, “These shortsighted cuts to defense capabilities will not protect our national interests. … A weakened U.S. military will only embolden our adversaries and threaten the safety of our citizens both at home and abroad.”

So far, the sequester appears to have pleased no one, except perhaps those fiscal hawks who agree to anything so long as the federal government is shrunk. The cuts are blind, irrational, hastily arranged, uncaring, arbitrary and dangerous. They are to good economic management what chain-saw sculpture is to Michelangelo’s David. Few doubt that federal expenditure is too high, but even if one is persuaded that cuts need to be made right now – which, as we remain stuck in a stagnant economy, flies in the face of macroeconomic reason – the sequester is the wrong way to make cuts and is already cutting the wrong things.

Although the federal government is reluctant to put a GDP figure on the cost of Hurricane Sandy, it and anticipation of the sequester drove American growth in the final quarter of 2012 into the red for the first time in 14 months. Even with Sandy, growth dropped by just 0.1 percent. The Congressional Budget Office estimates that the sequester alone will cost 0.6 percent in GDP this year. The cuts are not merely the enemy of good economic management but an automatic depressant upon the nation’s economic health.

There seems little sign that a “grand bargain” in Congress to settle the balance between revenue and spending is on its way. Instead weak lawmakers, true to form, are hoping to avoid having to take a decision by busily trying to exempt their pet projects and favorite causes from the sequester. The list of those lobbying to be taken off the hit list includes the homeland security department, drug and pharmaceutical companies, and medical equipment suppliers. But money saved on exemptions must be made up by cuts to other federal programs, only increasing the agony.

It is a mark of how dysfunctional Congress has become that even the failed bipartisan negotiations over gun control count as an optimistic sign that other matters, such as defanging the sequester, could be fixed through negotiation and compromise. Until that happens, we must impotently watch as essential government services slow down and seize up, and as Americans, particularly those at the bottom of the heap, cry out in pain. It will be something to think about as we line up for hours at the airport to catch our delayed planes.

***

Nicholas Wapshott’s Keynes Hayek: The Clash That Defined Modern Economics is published by W.W. Norton. Read extracts here.


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Cliff    
PA  |  April, 24, 2013 at 10:29 AM

Well, now, those planes are still flying. Delayed a little maybe but still getting us from here to there. And the police presence? Boston showed us a response we can all be proud of, and post-sequester, to boot. Sure, there are always little "inconveniences" whenever the Missus is forced to cut up her credit cards and stay out of the shopping malls. Life goes on. Healthier and happier in the end. Too bad the sequestration didn't cut 20% instead of a measly 2%. Bloated government will not be missed as we adapt our society to less nannying and fewer government handouts. It's gotta be done and it ain't gonna kill us.


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