Effects of Sequester Cuts Were Overstated, but GOP Hawks (and Obama) Want to Cancel It Anyway
At the end of February, President Obama practically pleased with Congress to put a stop to budget reductions that were about to take effect as a result of sequestration. " Our top priority as a country right now should be doing everything we can to grow our economy and create good, middle class jobs," he said. "And yet, less than one week from now, Congress is poised to allow a series of arbitrary, automatic budget cuts that will do the exact opposite." The title of the address: Congress must act now to stop the sequester.
Congress didn't act to stop the sequester. The reductions took effect. And what happened? Not much—and certainly not the terrible toll that the sequester's opponents warned of. The federal furloughs that agencies complained about so loudly, for example, have turned out to be far less extensive than predicted. "Most major departments have reduced furlough days, or eliminated them altogether," reports Government Executive:
The earliest examples came from departments that told Congress they would have to furlough employees, but ended up backtracking. The Education and Justice departments fall into this category. The Agriculture, Transportation and Homeland Security departments all received authority to transfer funds between agency accounts, and were therefore able to cancel planned furloughs. The Commerce Department projected furloughs at its National Oceanic and Atmospheric Administration, only to cancel them in May.
The most significant example of furlough reductions has been the Defense Department. The Pentagon originally planned to furlough all 750,000 of its civilian employees for 22 days. It then used reprogramming to trim that number to 11 days, and more recently -- through a series of cost-cutting measures and inter-service transfer of funds -- reduced the days of unpaid leave to six. The furloughs are now estimated to affect about 650,000 Defense civilians.
Several agencies have relied on "internal reviews" of their financial conditions, during which they discovered cost-cutting measures had made their situations less dire than originally anticipated. This, in turn, allowed them to cut required furlough days.
The Treasury Department, for example, originally said it would furlough all 90,000 of its Internal Revenue Service employees five days, but has since cut the number of days to three.
Meanwhile, the private defense contractors who were so worried about sequestration-related spending reductions, which fell most heavily on the defense budget, seem to be doing just fine, according to a Washington Post report from July:
Big defense contractors are weathering the federal budget sequester far more easily than they projected, in part because they have gradually eliminated jobs over the past few years in anticipation of spending cuts.
Bethesda-based Lockheed Martin, the world's largest defense contractor, reported Tuesday that its profit rose 10 percent, to $859 million, during the second quarter even as revenue dipped slightly. Northrop Grumman and General Dynamics, two other large contractors, are scheduled to report results Wednesday.
…Lockheed Martin had predicted that sequestration would wipe out $825 million in revenue this year, but it no longer expects such a big hit. In fact, the company said, profit will be higher than initially projected.
This helps explain why the predictions of economic troubles that were supposed to arrive following the sequester never quite came true.
The reality of sequestration's non-disastrous effects doesn't seem to have set in with the GOP's hawks, however. Sen. John McCain, a vocal opponent of the sequester, has aligned himself with the White House in pushing Senate Republicans to negotiate a budget deal that ends sequestration—largely in hopes of reversing the defense cuts. President Obama, meanwhile, has vowed to continue fighting the sequester too.