Expect Sequestration to Hit Much Harder in 2014, Report Says

Less severe cuts, deferred costs and temporary solutions mitigated sequestration’s effect in its inaugural year, but will not help lessen the impact in 2014, according to a new report.

The Center for American Progress, a liberal think tank, said the tactics federal agencies used to reduce furloughs in fiscal 2013 are, in many cases, no longer available. In fact, they will largely accentuate the severity of the cuts this time around.

For example, Congress allowed the Federal Aviation Administration to move funds from an account meant to provide maintenance to airports nationwide to avoid furloughs of air traffic controllers that would have delayed flights. Similar budgetary “gimmicks” were employed at the Agriculture Department to stave off furloughs of meat inspectors and by the Justice Department, which has already announced plans of 10 furlough days for FBI agents in 2014.

Every major federal agency reduced its furlough projections in fiscal 2013, though that will likely be impossible this year, the report found.

“In some cases, agencies minimized their sequester cuts using budget gimmicks, but those gimmicks only work once,” wrote Harry Stein, CAP’s associate director for fiscal policy. “In other cases, agencies drained their reserve and investment accounts to sustain urgent needs, but those accounts need to be replenished later.”

The Defense Department was able to reduce original projections of 22 furlough days for civilians to just six by putting off expenses elsewhere. The Pentagon, however, will soon have to resume training its personnel, hiring more staff, repairing its infrastructure and purchasing new equipment, Stein said.

“Federal agencies have implemented sequestration under the assumption that it is a short-term glitch -- one that Congress will soon fix,” he wrote. “Federal agencies have weathered sequestration as best they can, as long as it is just a short-term problem. But if sequestration becomes the new normal, all of these quick fixes will have only made things worse for the American people.”

Additionally, the CAP report found many of the cuts made to meet reduced budget caps last year have not yet gone into effect. That, combined with the fact that sequestration will cut $24 billion more from agency budgets in fiscal 2014 than it did the previous year, will mean much more severe effects.

Finally, CAP noted sequestration’s impact has flown under the radar of the American public because programs like Social Security, Medicaid and veterans’ benefits were exempted from the cuts. Lower profile programs that have more of a residual impact and affect fewer people have already absorbed significant budget reductions, however. Agencies such as the National Science Foundation and National Institutes of Health have cut research significantly. Additionally, federal investigators and inspectors general -- who find savings 35 times their collective budgets -- are conducting fewer audits and identifying less waste, the report said.  

A House-Senate congressional budget conference committee is attempting to negotiate a deal to fund government past Jan. 15, with Democrats steadfast in their desire to offset sequestration with other cuts and increased revenues and Republicans more reluctant to do away with what they say has worked to reduce the budget.

Stein said it is not too late for the harm to be undone. 

“Sequestration was never meant to happen and Congress made a mistake by allowing it to kick in,” he wrote. “As long as that mistake is fixed soon, the damage can be contained.”