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Category: Budget

SNOW! Oh, and House Considers FY 2013 CR Today

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Federal government is closed today due to an approaching snow storm in the Washington, DC area. It is currently snowing heavily and sideways outside my window, but it is wet snow and doesn’t appear to be sticking much yet. The National Weather Service has issued a winter storm warning through 3:00am Thursday morning, and the local ABC affiliate reports the metro region could get between 5 and 10 inches of snow with heavier snowfall in the suburbs.

All of this activity won’t keep the House from considering their legislative proposal to fund government for the remainder of FY 2013 (the current continuing resolution expires on March 27th). This morning the House will consider both the rule for and passage of the CR to fund the government, with votes wrapping up between 1:00pm and 1:30pm, which should give most members time to get out of town before the bulk of the snow hits the ground. Of course, this probably won’t help members like ours on the west coast as airports in the area have already started cancelling outbound flights.

The House is expected to pass the $984 billion CR today but it does not include much language to soften the blow of the sequester that went into effect last Friday. While it will give the Defense and Veterans Affairs departments more flexibility in implementing cuts, in addition to providing a few extra dollars for each, the proposal will do little to blunt the impact of sequestration on education and research programs.

The House bill would effectively cap regular FY 2013 discretionary spending at about $984 billion, with the sequester triggered on March 1st automatically slicing about $59 billion from the bill’s starting level of $1.043 trillion. That’s somewhat more spending than the $974 billion estimate offered by House Republicans before March 1st when the Office of Management and Budget released its final call on the sequester’s effects. The numbers changed after OMB removed the expenses of programs exempt from sequester, such as military pay, the Department of Veterans Affairs, and Pell grants, and added in other money that had not been included in the original assessment of federal spending, such as some unobligated balances.

The Senate may try to move stand alone bills to fund some areas of government rather than just approving another CR. So far they have made some progress on bills to fund Agriculture, Commerce-Science-Justice, and Homeland Security. With only two more working weeks before the two-week Easter recess it is hard to imagine that they will be able to accomplish this and also get the House to agree to that process.

Obama Orders Sequestration

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Late last night, President Obama issued the order mandating sequester cuts across the federal government. Here is the order and link to the Office of Management and Budget’s report to Congress:

SEQUESTRATION ORDER FOR FISCAL YEAR 2013 PURSUANT TO SECTION 251A OF THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT, AS AMENDED

By the authority vested in me as President by the laws of the United States of America, and in accordance with section 251A of the Balanced Budget and Emergency Deficit Control Act, as amended (the “Act”), 2 U.S.C. 901a, I hereby order that budgetary resources in each non-exempt budget account be reduced by the amount calculated by the Office of Management and Budget in its report to the Congress of March 1, 2013.

Pursuant to sections 250(c)(6), 251A, and 255(e) of the Act, budgetary resources subject to sequestration shall be new budget authority, unobligated balances of defense function accounts carried over from prior fiscal years, direct spending authority, and obligation limitations.

All sequestrations shall be made in strict accordance with the requirements of section 251A of the Act and the specifications of the Office of Management and Budget’s report of March 1, 2013, prepared pursuant to section 251A(11) of the Act.

BARACK OBAMA

THE WHITE HOUSE,

March 1, 2013

Sequestration Begins at Midnight Tonight

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Sequestration officially starts today around midnight, though Obama could issue the order sooner that will direct federal agencies to make cuts of about 9 percent for most nondefense discretionary programs and 13 percent for defense programs. This represents $85 million is spending cuts over the remaining seven months of FY 2013. If kept in full, sequestration would total $1.2 trillion in spending cuts and savings over the next decade.

It should be noted that today’s sequestration deadline is just the first of two budgetary deadlines in March. The second is on March 27th when the continuing resolution is set to expire, meaning Congress must approve a budget for the remaining seven months of FY 2013 or face a government shutdown. We believe this is a much more significant date than today’s sequestration deadline because it is the next best (and last) opportunity for Congress to soften the blow of sequestration for FY 2013.

No one really knows for certain how sequestration will impact individual federal programs, but we are starting to learn about how the cuts will start to impact the federal government. There is a lot of speculation out there, but here’s what to expect according to one article in Politico.com this morning:

Today: Sequestration goes into effect around midnight when the Office of Management and Budget (OMB) issues a notice ordering agencies to make cuts. The first issue federal agencies will deal with are possible furloughs since they need to give 30 days notice to employees. Talks center on how the furloughs will be implemented, who’s covered, mandatory days off around holidays and whether to go in phases over the next seven months so budget officials can re-evaluate whether more or less time off is needed. Hiring freezes — used by some agencies to avert furloughs — will also go into effect

Next Week: The bulk of the furlough notices will start going out. Each agency and/or department will determine the number of days, but preliminary estimates include 13 days at the EPA and 15 days at USDA. Forced days off will mean cuts in annual pay of about 10 percent. Uniformed military personnel as well as employees at the Department of Veterans Affairs and the US Postal Service are exempt from the furloughs. States dependent on federal grants will most likely get word by next week about what’s happening to their money for the rest of the fiscal year. We should learn more information about Education Title I grants, HUD’s Community Development Block Grants, EPA Clean Water grants, and even some information on NIH grants.

March: Sequestration will begin to impact federally funding operations and services. For example, it will likely impact the opening of the commercial fishing season as NOAA will not have enough personnel to provide at-sea observers or resources to complete fisheries assessments. The Department of Education will immediately cut funds to states to help districts without large property tax bases, including students who live on military bases and Indian lands. And the US Forest Service will see immediate reductions just as they are gearing up for fire season.

April: This is the month that reality will set in. We won’t see closures or work stoppages, but rather a general slow down in federal government services. For example, furloughs will begin and are expected to impact everything from air traffic controllers, USDA inspections, and even the IRS just as tax season reaches its peak. And services like snow removal at Yellowstone National Park may delay the traditional opening of the tourist season there.

May and beyond: The cuts will continue to trickle down to states, municipalities, and other entities that rely on federal funds, like the University of Washington. This is likely when we will start to have a better sense of the direct impacts of sequestration.

The Office of Federal Relations continues to urge our Congressional delegation to do all they can to protect investments in research funding and preserve access to post-secondary education by protecting federal student aid programs.

Senate Sequester Delay Measures Fail

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As predicted, the Senate rejected a Republican bill giving President Obama broad discretion to implement $85.3 billion in spending cuts — or sequester — over the remainder of FY 2013. The proposal failed 38 to 62. Senate Democrats also fell short of the 60 votes needed to move ahead with their own plan to forestall automatic across-the-board spending cuts. The 51-49 roll call failed to attract Republican support because of differences over taxes. The defeat of these two measures makes it almost certain the sequester cuts will go into effect by midnight Friday, March 1st.

Sequestration Tomorrow

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The Sequester is scheduled to take effect tomorrow, March 1st. There are some efforts to delay, modify, or turn off the sequester but none of those proposals have sufficient support to move through the legislative process at this point. A policy brief on this topic will be sent to the UW community today.

That said, there is still some activity related to the sequester. The Senate will vote today on Democratic and Republican alternatives to the sequester, but both versions are expected to fall short of the 60 votes needed. The GOP plan would let President Obama come up with alternative cuts by March 15th. Democrats will advance a plan that includes a mix of taxes and other spending cuts in their version.

Why is the sequester taking effect now with so little debate by Congress? Mostly because no one is getting what they want, but they are all getting something out of the deal that they all call a bad way to run government. Some of the most liberal members of Congress see the cuts as a rare opportunity to cut defense spending. And the poor are protected from the worst of the cuts, and so the process could take some pressure off the Democratics to make changes to Social Security and Medicare. At the same time, the President gets some relief from fiscal issues to focus on his top policy priorities: immigration and gun control. And Republicans, while certainly concerned about the level of military cuts, finally see the federal government shrinking in real dollars.

So tomorrow we will see March 1st and the beginning of sequestration, but this is not the end of the debate. The next few weeks will determine how the sequester is actually implemented as Congress decides how to fund the remainder of FY 2013 when the current CR expires at the end of March. So there may be some “modifications” to sequestration during March. And Congress may actively try to modify other effects of the sequester through the FY 2014 appropriations process. Essentially, this process of reducing federal spending will continue on even without the threat of sequester.