So, here’s a question that is either way too easy to answer or way too complicated to get an answer to. Post-supercommittee failure, Washington has agreed that the mandatory $1.2 trillion in sequestration, to be divided between non-defense discretionary spending and “security” spending (a rhetorical shift that included DHS and other monies, to win some Republican support), amounts to a “meataxe” or “cleaver” or “blunt object of your choice,” instead of the sort of smart scalpel we need to use on the budget. I’ve assumed this, too, and members of Congress have assumed it. To scare life into the supercommittee, the cuts needed to big and dumb.
The problem: I’m not sure that the cuts are necessarily dumb. If you go to the Budget Control Act (the debt deal), it lacks the specific numbers for cuts that you see in, say, appropriations bills or continuing resolutions. You find guidelines. These are the opening guidelines on the defense cuts.
DEFENSE FUNCTION REDUCTION
(A) DISCRETIONARY.—OMB shall calculate the reduction to discretionary appropriations by—
(i) taking the total reduction for the defense function allocated for that year under paragraph (4)
(ii) multiplying by the discretionary spending limit for the revised security category for that year; and
(iii) dividing by the sum of the discretionary spending limit for the security category and OMB’s baseline estimate of nonexempt outlays for direct spending programs within the defense function for that year.
(B) DIRECT SPENDING.—OMB shall calculate the reduction to direct spending by taking the total reduction for the defense function required for that year under paragraph (4) and subtracting the discretionary reduction calculated pursuant to subparagraph (A).
Congress isn’t being told “you have to cut $600 billion RIGHT HERE.” It’s been alerted that OMB will carve up the defense budget in 2013, using its discretion.
“Hang on,” you say. “Didn’t I hear testimony in front of Congress, saying that these meataxe cuts would kill a million jobs?”
You did! It’s wasn’t accurate. GMU’s Stephen Fuller produced a study of the possible impact of the defense cuts, but he based his number on a possible $1 trillion package, not on the $600 billion we’re getting. He assumed that the larger cuts would apply without discretion, cutting away at spending, and killing 352,745 jobs – he got the million number by estimating how other industries would be effected by a surge of unemployed people.
But the Budget Control Act doesn’t say there’ll be a blunt cut. It says OMB has to figure something out. OMB has options. Sen. Tom Coburn proposed nearly $1 trillion in defense cuts as part of his “back in black” plan. Let’s say OMB takes Coburn’s recommendation to cut the nuclear arsenal, cut 10 percent of the R&D budget, and gets a better contract for its F-35A Joint Strike Fighters. Boom: It just saved $165 billion.
So if all else fails and the cuts don’t get reversed, OMB can use discretion. “For the parts of the statute that are not clearly prescriptive,” says OMB spox Meg Reilly, “we will be working with agencies to figure out how to apply it to their particular programs.” Reilly gives me a caveat, which makes the “we must act!’ argument nicely: “Except where statutory exemptions apply, the cuts would be distributed in such a way that all accounts in the category would be reduced by the same percentage.”
I just don’t see where, in the statute, that has to be true.
