Looming spending cuts hit more than defense

[August 14, 2012]  WASHINGTON (AP) -- It's not just the Pentagon and defense contractors that face a funding crisis from broad government spending cuts in January. Domestic programs are on the chopping block too, in ways that could affect average Americans more.

Fewer air traffic controllers, border guards, FBI agents and park rangers would be on the job as furloughs sweep across the government. Less meat might get inspected, and fewer people would get winter heating subsidies.

Military personnel would be exempt from the cuts, but neither Congress nor the White House would be spared.

At issue are sweeping across-the-board spending cuts due to strike Jan. 2 as punishment for the failure of last year's deficit supercommittee to reach a budget deal for achieving less red ink in the future.

The idea behind the automatic cuts, called a sequester in Washington parlance, was to force the warring sides to agree on a deal to slash out-of-control deficits that currently require the government to borrow 33 cents of every dollar it spends. The sequester was intentionally designed to be harsh if the negotiators couldn't agree.

While Republican defense hawks are up in arms over $55 billion in cuts that would slam the military next year and wreak havoc in the jobs-rich defense industry, there's been relatively little attention paid to a matching $55 billion cut from domestic programs.

"The situation on the domestic side is just as bad as the situation on the defense side, but you don't have as many contractors who are willing to lobby and scream publicly," said budget expert Richard Kogan of the liberal-leaning Center on Budget and Policy Priorities.

The impact of the cuts is shrouded in both debate and mystery. Alarmists warn that smaller airports would have to close for lack of air traffic controllers and say meat plants could be temporarily shuttered for a lack of inspectors. Others say agency managers will be able to mitigate much of the impact, especially if the automatic cuts are turned off after a short while.

Some of the biggest and most important programs are exempt from the cuts entirely: Social Security, Medicaid, food stamps, veterans' health care and federal employee pensions. Medicare cuts would be limited to 2 percent.

But farm subsidies would be cut, as would federal courts, the National Weather Service and food aid for pregnant women.

Day-to-day domestic programs funded by appropriations bills each year face cuts of about 8 percent. But since the new budget year begins Oct. 1 and the cuts don't take effect until Jan. 2, they all have to be absorbed in nine months and might therefore feel more like 12 percent.

Agency budget officials could begin husbanding resources in October, but only if they're willing to flout White House and congressional directives to maintain normal spending through the election and up to January.

Last year's budget law requires cutting every "program, project and activity" by an equal percentage, so managers have no choice but to cut payroll costs. They're more likely, however, to furlough workers temporarily rather than lay them off, especially since few believe that Congress would let a sequester drag on for months. Laying off federal workers also takes time; generally they enjoy more legal rights than private-sector employees.

Once the election is over, intense negotiations are expected on sidestepping the sequester and the expiration of former President George W. Bush's tax cuts. The two events have been dubbed a "fiscal cliff" because many economists fear the combination will plunge the country back into recession.

While there's no guarantee that the negotiations will bear fruit, few people in Washington believe a sequester would remain in place more than a few weeks.

"I don't think anybody can be confident that anything's going to happen in the lame duck" session of Congress, said Scott Lilly, a former longtime aide on the House Appropriations Committee who's now with the Center for American Progress think tank. "People find it so absurd that they don't think it's at all possible that it's going to happen. And when they find out it has happened, the reaction is going to be extreme. Sometime in January you're going to see the Congress finally come to its senses."

The real-world impact of a short sequester of several weeks would vary program by program. For example, Education Department grants to school districts are sent out in early fall and wouldn't be affected unless the sequester dragged on for months. The same for a program like Head Start, in which funding is delivered to states in the summer.

But labor-intensive programs like air traffic control, meat inspection and Transportation Security Administration screening at airports would be affected immediately. Fewer employees at national parks could mean closed campgrounds and less access for visitors, and there would be fewer workplace safety inspectors at job sites.

Cuts in other federal programs might go unnoticed for a while. For example, many people eligible for subsidized housing vouchers are already on waiting lists. Their wait would just be longer.

The impact would be more pronounced if gridlock persisted and the sequester lasted a year.

In testimony to Congress earlier this month, acting White House Budget Director Jeffrey Zients said the automatic spending cuts would mean that 700,000 fewer low-income women and children would receive food aid and 100,000 preschool kids would lose places in Head Start

Zients said such cuts "would jeopardize critical programs that improve children's health and education, adversely impacting future generations."

Sen. Tom Harkin, D-Iowa, who chairs the Senate Appropriations Committee panel responsible for education and health-related spending, released a staff report last month which broke the cuts down further.

It estimated that the sequester could mean more than 12,000 HIV-positive people would lose access to their antiviral drugs, and that a $2.7 billion cut in federal funding for Title I grants to schools, special education funding and Head Start could mean more than 46,000 lost jobs.

"Some members of Congress warn that defense contracting firms will lay off employees if sequestration goes into effect," Harkin said at a recent hearing. "They say nothing of the tens of thousands of teachers, police officers and other public servants in communities all across America who would also lose their jobs. A laid-off teacher is just as unemployed as a laid-off defense contractor."

[Associated Press; By ANDREW TAYLOR]

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