Sequestration – It’s here!!

Monday, April 01, 2013

Despite weeks of dire warnings and a classic case of Washington finger-pointing, sequestration formally arrived on March 1 and is probably here to stay.

Here is what we know:

For the remaining seven months of the fiscal year, the defense budget will shrink by $42.7 billion while non-defense programs will take a $28.7 billion hit;

Most of the reductions will come from discretionary spending;

If federal employees are furloughed, it would not begin until April at the earliest;

Military personnel pay and allowances will not be impacted by the sequester nor will military personnel face furloughs;

The effects of terminating base support contracts as well as military community and base activities would not be felt until early April;

Civilian furloughs could affect military hospitals and clinics because civilians make up 40 percent of the workforce. Patients who currently receive care at military treatment facilities may be forced to seek case in the private sector at an increased cost to the Defense Department and the taxpayer;

Commissaries may have to close one day a week; and,

Child care services, base schools, teen programs and family services may also be impacted as funding tightens.

As we have said on many occasions, this is no way to do business. We agree with the Army’s chief of staff, Gen. Ray Odierno, who said that what the Army needs most is some budget predictability through several years so that end-strength, modernization and readiness can be carefully balanced and a hollow force avoided.

Congress has already moved on to the next budget battle – the expiration of the continuing resolution on March 27.

A spending measure passed by the House on March 5 takes the threat of a government shutdown off the table while providing funding for the Defense Department and the VA.

The measure leaves the cuts imposed by sequestration in place, but will give the Pentagon and the VA greater flexibility on how their money can be spent.

The bill did not offer that same flexibility to other government agencies. They will be funded at the current levels for the rest of the fiscal year.

That is the sticking point for the Senate as the bill heads their way. As this paper goes to press, the Democratic leadership in the Senate plan to move its own version of the spending package.

The main difference in this bill is that it will include new appropriations bills for several agencies. Funding for the Departments of Agriculture, Commerce-Justice-Science and Homeland Security is expected to be included.

Beyond adding bills, Senate Appropriations Committee Chairwoman Barbara Mikulski said that the bill could expand reprogramming authorities for those agencies to soften sequestration cuts.

Republicans appear willing to include the expanded package of bills provided it does not exceed $984 billion in discretionary spending, a figure matching the cap set under previous budget laws minus the automatic sequester cuts.

Although we would like to see Congress return to a normal budget process, removing the threat of a government shutdown is welcome news.