The defense cuts aren’t the biggest problem with the trigger
Now that the supercommittee is set to pull the “fail” lever, there’s no shortage of panic in Congress about the constraints on future military spending that will kick in as a result — saving $454 billion over 10 years. “This is not an outcome we can live with,” Sens. John McCain (R-Ariz.) and Lindsey Graham(R-S.C.) warned earlier this month.
Yet there’s nowhere near the same anxiety about the cuts to domestic discretionary spending that will also bite down once the supercommittee chucks in the towel. Arguably, there should be. Budget experts are already warning that these cuts to domestic spending — totaling $294 billion over 10 years, starting with a 7.8 percent cut in 2013, and coming on top of the spending caps in August’s debt-ceiling deal — could have even harsher consequences, both for everyday Americans and for the ability of the United States to maintain a thriving, competitive economy in the years ahead.
“This isn’t just a bunch of bureaucrats in Washington who are going to have fewer jobs,” says Isabel Sawhill, a former associate director of the Office of Management and Budget now at Brookings, of the cuts. “This is going to affect public safety, it’s going to affect low-income people, it’s going to affect veterans’ health care. We can’t just wave our arms and pretend it won’t have an impact on people’s lives.”
First, let’s define terms. “Non-defense discretionary spending” has been known to glaze over eyes and induce snores whenever it’s thrown around. Which is part of why politicians like to cut it. Everyone knows what Social Security is. Everyone knows what Medicare does. But what about domestic discretionary spending? Well, it’s anything that falls into Congress’s appropriations budgets each year. It’s the Veterans Health Administration. It’s medical research at the National Institutes for Health. It’s low-income housing assistance. It’s the Coast Guard. It’s highway spending. It’s EPA clean-air enforcement.
To make this more intuitive, Sawhill has picked through domestic discretionary spending and sorted all of the programs into four broad categories. There’s “competitiveness,” which includes things like energy and transportation infrastructure and R&D. There’s “low-income programs” like housing vouchers or nutrition assistance for women with infants. There’s “public safety”: border control, food inspections, etc. And then there’s care for veterans. Here’s how it all stacks up:
Notice that this spending makes up just 18 percent of the overall budget. No doubt there are some wasteful and unnecessary programs tucked in there. But one striking thing Sawhill found was that the money that could broadly be classified as “overhead” — salaries, administrative expenses, and so on — only came to about 4 percent of the federal budget. That suggests there’s not a ton of easy fat to trim. “Even relatively efficient organizations,” Sawhill wrote, “have overhead rates that are as high or higher than 4 percent.”
So how much of this will get cut? Recall that the Budget Control Act — the deal Congress reached in August to hike the debt ceiling — put a cap on all discretionary spending to cut $917 billion between now and 2021. Most of those cuts will likely hit non-defense items. The “trigger” that takes effect once the supercommittee fails, meanwhile, will cut an additional $294 billion from domestic discretionary over that time. The Economic Policy Institute’s Ethan Pollack drew a graph showing that, as a result, domestic discretionary spending will be far lower, as a portion of GDP, than it was during the Reagan or Clinton or Bush years:
Now, it’s hard to know what specific programs will get cut. Future congressional appropriators will have to thrash that out. But just to illustrate the scale here, Third Way has provided examples of what would happen if the the trigger’s 7.8 percent cuts were spread evenly, across the board, in 2013. We’d have 608 fewer food-safety inspectors, which would likely lead to some 49,000 more cases of Salmonella, E. coli, and other food-related diseases. We’d have 1,200 fewer FAA air-traffic controllers, which could lead to an estimated 205,527 more flight delays. There’d be 2,326 fewer IRS agents, which would likely lead to $4.5 billion less in tax revenue collected.
Indeed, the IRS example illustrates why many observers (see David Leonhardt here) think that cutting domestic spending is so short-sighted — and could, in some cases, worsen our deficit problems down the way. It’s more expensive to replace a highway later than it is to repair it now. Less scientific research could mean lower growth in the future, making it harder to muscle out of our debt burden. Gutting the IRS makes tax evasion easier, which means less revenue coming in.
Still, as long as Republicans refuse to raise taxes, and as long as Congress is jittery about touching Medicare or Social Security or defense spending, then this tiny portion of the budget is going to get squeezed disproportionately. And it’s hard to find the equivalent of a John McCain or a Lindsey Graham shouting, “This is not an outcome we can live with.”