If you don’t think Washington’s budget sequestration is hurting you financially, you’re probably wrong. But before considering why you’re wrong, let’s think about how you acquired that foolish sense of invulnerability.
Perhaps you’ve heard of the Washington Monument syndrome (also known as the “Fireman First Principle”). The legislature cuts the budget of a government agency—say, the National Park Service. The agency immediately reduces or eliminates some service that’s especially conspicuous to and prized by the public—say, tourist access to the Washington Monument. A hue and cry results, and the legislature quickly restores the budget cut.
Visitors to the Washington Monument during this summer of sequestration may think the Obama administration, which wants to restore the automatic budget cuts that took effect in March, is playing (and winning at) some version of this bureaucratic game. The hallowed obelisk is closed to tourists! As it happens, though, the cause is not budgetary brinksmanship, but rather a freak earthquake that occurred in 2011. The Washington Monument has been closed for repairs ever since. Meanwhile, a shutdown of White House tours—which arguably was an Obama ploy to turn the public against the sequester–backfired politically (or is backfiring at least for now).
White House tours remain stubbornly on hold, but other high-profile sequester cuts have been reversed due to public pressure. When furloughs of air-traffic controllers started causing flight delays, Congress cancelled them–just in time for its own spring recess. When furloughs of meat inspectors threatened to shut down meat packing plants, Congress cancelled those, too. The Pentagon, which is absorbing half the sequester cuts, was nonetheless able to reduce this year’s furloughs for most of its civilian employees from 22 days to 14 (though Defense Secretary Chuck Hagel still says the sequester is “severely damaging military readiness”).
All this may lead you to conclude, erroneously, that the sequester—which cut spending by $42 billion this year and will cut it by $89 billion next year— is basically harmless. Any part of it that you’re likely to care about is sure to be reversed. But that’s only because the sequester’s most harmful effects have been invisible to the broad public.
The sequester has been particularly devastating to programs that benefit the poor.
Housing. The sequester cut funding for housing vouchers this year by $854 million. As a result, state and local housing agencies can’t afford to renew these vouchers—this at a time when U.S. incomes for all but the top 1% are below where they were at the start of the economic “recovery” in 2009. Half of all public housing authorities have stopped issuing new housing vouchers even as the percentage of households most in need of assistance has, since 2009, grown by 19%.
Head Start. President Obama proposed expanding early childhood education in his 2013 State of the Union address, arguing that every dollar invested now could save seven dollars later “by boosting graduation rates, reducing teen pregnancy, even reducing violent crime.” But the federal government is this year cutting funding for its Head Start program by about 5%, or roughly $400 million. Applying Obama’s calculus, the 2013 cut alone will eventually require an additional $2.8 billion in spending to address social chaos America could otherwise have averted. The cuts will be particularly severe in the coming school year. (Click here to read an excellent recent report on the local impact by Sam Stein of the Huffington Post.)
Legal representation. Lawyers appointed as public defenders for the indigent in federal court are this year required to take up to 27 furlough days because of the sequester, which doubled already-planned cuts for federal public defenders from 5% to more than 10%. Next year the cuts will rise to 23%, requiring layoffs of up to half of all existing staffs at federal defender offices around the country. This will reduce public defenders’ effectiveness and increase the likelihood that more low-income people will be sent to jail for crimes they didn’t commit.
In 20 states there’s discussion of closing entire federal public defender offices. Since it’s not in Congress’s power to repeal Gideon v. Wainwright, the 1963 Supreme Court decision requiring courts to provide a lawyer to any defendant who can’t afford to hire one, the result will be the hiring of more private attorneys, who are paid, on average, nearly 30% more. And that’s before we consider the cost of incarcerating people who should walk free (not to mention the social cost of not incarcerating the real guilty parties, who shouldn’t). Once again, penny-wise budget cuts will prove pound-foolish.
Perhaps you’re lucky enough not to be poor. Even so, sequestration is hurting the larger economy.
Less funding for the National Institutes of Health and the National Science Foundation translates into less scientific research, which in turn translates into less innovation to stimulate economic growth.
More prosaically, the federal government has shed about 40,000 jobs since the sequester went into effect. Because state and local budgets are partly dependent on federal funding, the sequester has also contributed to the longer-term (and much larger) job-loss trend at the state and local levels.
According to Princeton economist Alan Blinder, America is currently experiencing its first economic recovery since World War II during which government employment (which comprises about one-sixth of all employment) went down rather than up. The sequester didn’t create that problem—the likelier culprits are Republican-controlled state legislatures in thrall to the anti-government Tea Party. But it’s definitely making it worse.
The government sector’s refusal to create jobs helps explain why the larger economy is creating jobs so very slowly. So if you’re wondering why unemployment, at 7.6%, is virtually unchanged since the beginning of this year, one big reason is the budget sequester.
Even if you’ve got a job yourself, an unemployment rate so stubbornly high can’t help impeding the growth of Gross Domestic Product, which during 2013’s first quarter was below 2%. Four years into an economic recovery, that’s pathetic.
The country is poorer than it ought to be, which means you probably are, too. So maybe you might consider caring about the sequester. Your accountant will thank you.