My school district client faces a $5 million reduction in federal funding for educational programs if the sequester goes through. That amount represents just under 1% of the total district budget, but of course a far larger share of their annual federal funding.
What will they do? Most programs will be continued with funding backfilled from reserves or other budget reductions, while some will be eliminated. They could provide no estimate of the "body count" impact.
In contrast, the Obama administration has fought the public relations war against sequestration--and in support of tax increases and "loophole closing"--not by planning for how to most effectively deliver services with fewer resources, but instead by painting a picture of the devastation to come. Recently departed Secretary of Defense Leon Panetta boldly asserted that any cuts at all to the Defense budget would necessarily reduce national security. This was an odd and disappointing stance from a man who has spent his life managing the federal budget--as Chairman of the House Budget Committee, Director of the Office of Management and Budget, White House Chief of Staff, and Defense Secretary--and who better than most understands that budgets are choices, and that the Department of Defense budget in particular has been famously larded with programs and systems the Generals themselves have opposed.
The Pentagon and its contractors have famously played politics to great budgetary effect over the years, making sure that each House district feels the benefits of Defense spending. So perhaps it was no surprise that the reaction to sequester was to play the same game. The first thing Panetta and his team propose to do is announce plans to furlough all of the 800,000 civilians working for the Department of Defense, who represent approximately 25% of total DOD workforce. This is not a strategy to manage the proposed 10% cuts seriously, but rather to maximize the political effect.
It would appear to an outside observer that this is the Administration battle plan: Unlike local governments across the country who are making plans to manage for a smaller funding level, demonstrate instead the chaos that will come if Congress does not bend to the Administration wishes.
This is an unfortunate strategy. The sequester may not be a smart way to manage the federal budget, but it may be proving to be the only way to manage the federal budget.
The Department of Defense is the case in point. Over the past decade, the DOD budget has grown by 60% as a share of GDP, from 3.0% to 4.7% of GDP. And this growth has been bipartisan, growing 43% under W. and a further 10% under Obama, and Congress has famously appropriated more than requested in the executive budget. Democrat activists in particular should support the sequester, as the mandated 10% cut in Defense appropriations marks the first reduction in Defense spending since the fall of the Berlin Wall.
It is not conceivable that within the massive DOD planning apparatus, there has not been significant work done to imagine a range of differing spending levels, force deployment configurations and alternative threat response strategies. Simply stated, it is irrational to suggest, as Secretary Panetta has, and as Administration response to sequester implies, that current funding levels are inherently optimal. The historical failure to have any serious management of the Pentagon budget by Congress--with any suggestion for reform or reductions met by charges of appeasement of surrender--makes a mockery of claims that nothing can be cut.
The current situation illustrates why Chuck Hegel was a poor choice for Defense Secretary, rather than former Undersecretary of Defense for Policy Michele Flournoy. The original notion may have been that nominating the Republican Hegel would ease difficult budget discussions with a Republican Congress, but clearly that notion was proven wrong by Hegel's ability to only win four Republican votes for his Senate confirmation. Flournoy, now at the Boston Consulting Group, is a specialist in budget strategies and can talk eloquently about the alternative strategic deployment futures and attendant spending reductions that should be on the table in world of limited resources.
President Obama's sequester strategy may be good politics in the short term, but it is likely bad politics in the long term. The greatest risk to the Democratic Party in 2014 and 2016 is that it fails to demonstrate its ability to manage the federal budget effectively as the economy recovers. Federal impact aid and other stimulus spending efforts were important to filling the void of the deep private sector recession post-2008. However, the stabilization of public sector employment and continued increases in public sector salaries during a period of private sector retrenchment has led to an imbalance that is now hard to reverse. Public sector budgets are now under great pressure as tax receipts in many jurisdictions remain below 2008 levels, while public employees--who were protected by the stimulus program from feeling the deep pain of the 2008-2010 recession felt in the private sector and whose salaries for the first time exceed those of comparable private sector workers--are loath to accept the need for budget cuts as economic growth is returning.
At election time, convincing the voters that your party is best able to manage the economy and the public enterprise remains a critical factor in the ultimate choices made by undecided voters, who tend to be fiscally conservative. For long, historical reasons--that may not be defensible given the disdain of both Ronald Reagan and W. for balanced budgets--this has been part of the Republican advantage in presidential elections. In 2012 this was not as salient a factor, both because the Republicans made an art of offending as many voting groups as possible, and because voters suspended their traditional criterial for assessing economic and fiscal performance in the wake of the deep post-2008 collapse.
By 2016, 2008 will have receded into memory, and once again fiscal administration will be fair game. Last year, the Pentagon spent more money on military bands than the nation spent on public broadcasting. Yet the President and Secretary Panetta continue to suggest that the military budget should essentially be considered untouchable, even as former Undersecretary Michele Flournoy has ably demonstrated that money alone is not the measure of our defense. With the sequester now reality, the Administration strategy should expand beyond escalating political rhetoric to get the funding reinstated, to demonstrating the Administration's ability to manage in an environment of reduced resources. When the next presidential year roles around, Democrats seeking the votes of those undecided voters in the center will need to be able to demonstrate their ability to manage in world of limited resources.
What will they do? Most programs will be continued with funding backfilled from reserves or other budget reductions, while some will be eliminated. They could provide no estimate of the "body count" impact.
In contrast, the Obama administration has fought the public relations war against sequestration--and in support of tax increases and "loophole closing"--not by planning for how to most effectively deliver services with fewer resources, but instead by painting a picture of the devastation to come. Recently departed Secretary of Defense Leon Panetta boldly asserted that any cuts at all to the Defense budget would necessarily reduce national security. This was an odd and disappointing stance from a man who has spent his life managing the federal budget--as Chairman of the House Budget Committee, Director of the Office of Management and Budget, White House Chief of Staff, and Defense Secretary--and who better than most understands that budgets are choices, and that the Department of Defense budget in particular has been famously larded with programs and systems the Generals themselves have opposed.
The Pentagon and its contractors have famously played politics to great budgetary effect over the years, making sure that each House district feels the benefits of Defense spending. So perhaps it was no surprise that the reaction to sequester was to play the same game. The first thing Panetta and his team propose to do is announce plans to furlough all of the 800,000 civilians working for the Department of Defense, who represent approximately 25% of total DOD workforce. This is not a strategy to manage the proposed 10% cuts seriously, but rather to maximize the political effect.
It would appear to an outside observer that this is the Administration battle plan: Unlike local governments across the country who are making plans to manage for a smaller funding level, demonstrate instead the chaos that will come if Congress does not bend to the Administration wishes.
This is an unfortunate strategy. The sequester may not be a smart way to manage the federal budget, but it may be proving to be the only way to manage the federal budget.
The Department of Defense is the case in point. Over the past decade, the DOD budget has grown by 60% as a share of GDP, from 3.0% to 4.7% of GDP. And this growth has been bipartisan, growing 43% under W. and a further 10% under Obama, and Congress has famously appropriated more than requested in the executive budget. Democrat activists in particular should support the sequester, as the mandated 10% cut in Defense appropriations marks the first reduction in Defense spending since the fall of the Berlin Wall.
It is not conceivable that within the massive DOD planning apparatus, there has not been significant work done to imagine a range of differing spending levels, force deployment configurations and alternative threat response strategies. Simply stated, it is irrational to suggest, as Secretary Panetta has, and as Administration response to sequester implies, that current funding levels are inherently optimal. The historical failure to have any serious management of the Pentagon budget by Congress--with any suggestion for reform or reductions met by charges of appeasement of surrender--makes a mockery of claims that nothing can be cut.
The current situation illustrates why Chuck Hegel was a poor choice for Defense Secretary, rather than former Undersecretary of Defense for Policy Michele Flournoy. The original notion may have been that nominating the Republican Hegel would ease difficult budget discussions with a Republican Congress, but clearly that notion was proven wrong by Hegel's ability to only win four Republican votes for his Senate confirmation. Flournoy, now at the Boston Consulting Group, is a specialist in budget strategies and can talk eloquently about the alternative strategic deployment futures and attendant spending reductions that should be on the table in world of limited resources.
President Obama's sequester strategy may be good politics in the short term, but it is likely bad politics in the long term. The greatest risk to the Democratic Party in 2014 and 2016 is that it fails to demonstrate its ability to manage the federal budget effectively as the economy recovers. Federal impact aid and other stimulus spending efforts were important to filling the void of the deep private sector recession post-2008. However, the stabilization of public sector employment and continued increases in public sector salaries during a period of private sector retrenchment has led to an imbalance that is now hard to reverse. Public sector budgets are now under great pressure as tax receipts in many jurisdictions remain below 2008 levels, while public employees--who were protected by the stimulus program from feeling the deep pain of the 2008-2010 recession felt in the private sector and whose salaries for the first time exceed those of comparable private sector workers--are loath to accept the need for budget cuts as economic growth is returning.
At election time, convincing the voters that your party is best able to manage the economy and the public enterprise remains a critical factor in the ultimate choices made by undecided voters, who tend to be fiscally conservative. For long, historical reasons--that may not be defensible given the disdain of both Ronald Reagan and W. for balanced budgets--this has been part of the Republican advantage in presidential elections. In 2012 this was not as salient a factor, both because the Republicans made an art of offending as many voting groups as possible, and because voters suspended their traditional criterial for assessing economic and fiscal performance in the wake of the deep post-2008 collapse.
By 2016, 2008 will have receded into memory, and once again fiscal administration will be fair game. Last year, the Pentagon spent more money on military bands than the nation spent on public broadcasting. Yet the President and Secretary Panetta continue to suggest that the military budget should essentially be considered untouchable, even as former Undersecretary Michele Flournoy has ably demonstrated that money alone is not the measure of our defense. With the sequester now reality, the Administration strategy should expand beyond escalating political rhetoric to get the funding reinstated, to demonstrating the Administration's ability to manage in an environment of reduced resources. When the next presidential year roles around, Democrats seeking the votes of those undecided voters in the center will need to be able to demonstrate their ability to manage in world of limited resources.
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