Why Sequestration Is Poised to Kill Trump's Budget

Six years ago, in the first act of a budgetary drama, a group of aggrieved legislators hung a daft gun over the mantle. Now, in its third act, it is set to fire.

The gun is the arcane fiscal tool called sequestration, and it now poses a mortal threat to President Trump’s budgetary agenda, announced in greater—if hardly great—detail today. One might think that Trump’s proposal would be easily pass through the Republican Congress, as it expands the security budget and winnows much of the rest of the government. Many Republicans are defense hawks seeking more money to fight ISIS and modernize the armed forces. Many others are budget hawks bent on cutting Washington down to size.

Yet the proposal is dead on arrival. To appropriate funding as the White House wants, Trump would need to repeal or subvert sequestration. To do that, he would need to overcome the threat of a Senate filibuster. To do that, he would need to woo some number of Democrats. To do that, he would need to overhaul his budget figures. And in doing that, Trump would almost certainly lose too many Republican votes to pass his budget.

Sequestration shoots. Sequestration kills.

“Show me the budget deal that would increase defense spending, lift the budget caps, keep all Republicans, and bring in eight [Senate] Democrats,” said Todd Harrison, a military spending expert at the Center for Strategic and International Studies, a foreign-policy think tank. “It doesn’t exist.”

This morning, Trump released the details of his so-called “skinny budget,” a proposal for government spending in the 2018 fiscal year. (In contrast to prior presidents, Trump has not proposed any changes to the tax code or to entitlement programs such as Social Security.) He asked for $54 billion in additional defense spending, paid for with cuts to domestic programs, including money for public diplomacy, famine relief, low-income housing, and scientific research, also axing entire agencies including the National Endowments for the Arts and the Humanities as well as the Appalachian Regional Commission.

Trump’s proposed bump to military spending is significant if not huge, defense experts said. “It is a 9 or 10 percent increase from where we are right now, and also a 10 percent increase from the budget cap for fiscal-year 2018,” Harrison told me. “But the Obama administration, in their last budget request, had said they wanted a $33 billion boost in 2018. So it is not much of an increase compared with what the Pentagon was already planning for.”

Those non-defense cuts, on the other hand, would pose an existential threat to many important and popular programs—so much so that Republican appropriators are already balking at making them. The Center on Budget and Policy Priorities, a Washington-based think tank, has calculated that Trump would slash the already-threadbare nondefense discretionary budget to 30 percent below its 2010 spending level—down to the smallest sliver of output since 1999, perhaps, and among the smallest slivers of output since the early 1960s.

Many of those nondefense discretionary programs benefit lower- and middle-income Americans, with housing support, funding for legal defense, or money for heat in the winter. Given that Trump is also floating regressive tax- and entitlement-reform policies, “the indications are mounting that when we get the full Trump budget, it may represent the most aggressive Robin-Hood-in-reverse budget proposal by any president in modern U.S. history,” said Bob Greenstein, the president of the CBPP, speaking with reporters this week.

Not that this skinny budget request is going anywhere, thanks in no small part to sequestration. Back in 2010, with the economy just starting to claw its way out of the Great Recession and the government racking up hundreds of billions of dollars in debt, President Obama and members of Congress agreed to try to reduce the deficit in the longer term as part of a debt-ceiling deal. They passed a Kafkaesque law, the Budget Control Act, that would implement a brutish trillion dollars in cuts unless they came to a smarter grand bargain. Those cuts were divided equally between defense and nondefense spending, and applied indiscriminately across all eligible programs. Both sides hated the cuts from the get-go—indeed, that was the point. But no grand bargain materialized. And sequestration, odious as it is, has stuck around.

The nitty-gritty of the law puts caps on the amount that Congress can spend on defense and on nondefense discretionary programs up through 2021. It bars Congress from shifting money from defense to nondefense programs, or back again, under the cuts. And congressional rules prevent legislators from using reconciliation—a way to vault over the 60-vote threshold in the Senate—to get out from under the caps or to eliminate them entirely. 

In other words, to spend more than the Budget Control Act allows, the party in power needs to pass a law with support from the other side.

Trump has proposed eliminating the defense sequestration cap, and his budget seems to suggest setting a single defense and nondefense cap. “My understanding of what the White House is actually proposing is to replace the separate caps on defense and nondefense spending with one cap on total discretionary spending,” Ed Lorenzen, a budget expert at the Committee for a Responsible Federal Budget, told me. But to do so would require Democratic votes.

Those votes are unlikely to be forthcoming—certainly not if Trump or Republicans in Congress are pushing for austerity for diplomatic programs and killing Big Bird. Democratic aides said that they would be demanding dollar-for-dollar parity, meaning an extra dollar for domestic programs for every extra dollar in defense, as a bare minimum. “As has been shown over and over again the past few years, Republicans cannot complete the appropriations process on their own under sequestration’s unrealistic targets,” Steny Hoyer, the House minority whip, said in a statement last month. “President Trump will soon learn that funding federal agencies is much easier with bipartisan cooperation.”

There might, however, be creative ways out of this budgetary bind. The White House could put its defense appropriations in the Overseas Contingency Operations fund, meant for war spending, Harrison theorized. But the skinny budget itself does not use that budgetary maneuver, and Trump’s own budget director, Mick Mulvaney, has been among the harshest critics of politicians putting normal defense outlays into the OCO and using it as a “slush fund.” (The White House did not respond to questions about how it plans to negotiate sequestration.)

Trump could get more creative, prompting congressional Republicans to break parliamentary rules to pass his budget, Stan Collender, a budget expert and executive vice president at Qorvis MSLGROUP, told me. But that seems unlikely as well. “You’d have to bastardize the reconciliation process,” Collender said. “It would require the parliamentarian being bought and paid for, or replacing him, or unanimous consent. And there isn’t unanimous consent for a reading of the Lord’s Prayer in Congress right now.”

Or Trump could demand that Congress pass a budget in defiance of the sequestration caps, with the White House spending money in defiance of federal law. “We’re talking about the president violating federal law, the budget office violating federal law, and the Senate majority leader flouting federal law,” Collender told me. “Trump’s base would probably enjoy that a lot. But we’re talking about lawlessness, or legislative chaos. The last time that happened with the budget was with Nixon and impoundment.”

What seems much more likely is that Trump will find himself in a similar position to Obama, and that this Congress will find itself in a similar situation to past Congresses. Dramatic proposals will soon become piddling changes. Grand budget deals will instead become a series of muddling-through continuing resolutions. Disorder, sludge, idiocy, randomness, and inertia will win out.

That is hardly taking into account the broader hurdles that Trump faces, despite Republican control of government. His blustery populism has already collided with Republicans’ small-government conservatism, raising the question of how to shrink the government without touching Medicaid, Medicare, or Social Security, or how to balance the budget while implementing massive tax cuts. Sequestration might be an important check on Trump. But it is hardly the only one.

“We very well could be headed towards a budget standoff this fall,” Harrison told me, given the need for Democratic support for the White House’s proposals. “I don’t see an easy path forward.”