Nobody’s happy about the sequester, the government spending cuts that took effect a few days ago, but most people think it was a necessary evil.
Evil? Maybe. Necessary? Absolutely not.
In June 2011, before Congress passed the Budget Control Act, the Congressional Budget Office released its annual “Long-Term Budget Outlook.” This is the best nonpartisan projection we have of what the federal budget would look like without the sequester.
The CBO considered two possibilities.
First, what would the budget look like if Congress did absolutely nothing? The Bush tax cuts would expire as scheduled, Obamacare would take effect, and Medicare payments to doctors would remain at current rates. They called this the “Extended-Baseline Scenario.”
Second, what if Congress stopped all those things from happening? They extended the Bush tax cuts permanently, repealed Obamacare, and raised Medicare’s payment rates for doctors every year. They called this the “Alternative Fiscal Scenario.”
The difference is stunning. In the Extended-Baseline Scenario, the government’s debt never increases. Relative to the size of the economy, it’s the same in 2033 as it was in 2013. Meanwhile, in the Alternative Fiscal Scenario, it skyrockets. By 2033, it’s double what it was in 2013.
The Alternative Fiscal Scenario is what scared legislators into passing the Budget Control Act. They decided to slash government spending across-the-board by over $2 trillion over the next decade in order to avoid a massive increase in debt.
But why were they looking at the Alternative Fiscal Scenario? After all, the Extended-Baseline Scenario showed that the debt problem disappeared if Congress simply did nothing. Why didn’t they just…do nothing?
Well, if they did nothing, taxes would go up, and doctors’ payments wouldn’t. The politics speaks for itself.
Instead of doing nothing, Congress made 84 percent of the Bush tax cuts permanent at the beginning of this year, and of course, doctors’ payments continue to rise.
And that’s why they needed the sequester to rein in rising debt.
But that doesn’t explain why the sequester was an across-the-board cut in government spending when, according to the CBO, we don’t have an across-the-board spending problem.
Let’s look at the 2011 Budget Outlook one more time.
In the Alternative Fiscal Scenario, it’s true that spending increases dramatically — from 24.1 percent of our nation’s income in 2011 to 33.9 percent in 2035. But it’s not across-the-board. In fact, if you exclude health care programs and interest payments, federal spending actually decreases from 17.1 percent in 2011 to 14.6 percent in 2035!
In other words, we don’t have a spending problem. We have a health care problem!
If we had the health care costs of the average industrialized country – which has a higher life expectancy than us, by the way – we’d save over $2.5 trillion over the next decade, far more than the sequester.
And yet, looking at these numbers, our legislators decided to slash government programs across-the-board, the vast majority of which nothing to do with the problem. They chose to kick 70,000 kids out of Head Start; eliminate funding for 1.2 million disadvantaged students; serve 4 million fewer Meals on Wheels; eliminate nutrition assistance for 600,000 women and children; kick 120,000 families out of low-income housing; kick 100,000 homeless people out of shelters; conduct 2,100 fewer food inspections; conduct 1,200 fewer workplace safety inspections; treat 373,000 fewer mentally ill Americans; employ 1,000 fewer federal law enforcement agents; prosecute 1,000 fewer criminal cases; issue 1,000 fewer science research grants; guarantee $540 million less in loans to small businesses; conduct 424,000 fewer HIV tests; and treat 7,400 fewer AIDS patients. And that’s only this year, when less than 10 percent of the sequester will kick in.
All because they didn’t want to deal with the real problem.
Last month, the CBO published a new Budget Outlook. Including the effects of the sequester, it shows debt declining for the next few years, and then in 2019 it starts to rise again. That’s the dirty little secret that Congress won’t tell you: Even $2 trillion in spending cuts can’t stop the rise in debt…because spending simply isn’t the problem.
This op-ed was published in today’s South Florida Sun-Sentinel.