Sequestration Report Highlights Detriments of Budgeting by Crisis

Across-the-board budget cuts in fiscal year 2013 affected the ability of agencies to serve the public. In response to these automatic cuts – triggered by the Budget Control Act of 2011 and a lack of consensus regarding changes in spending and revenue policies – agencies were forced to retrofit their budgets to fit these constraints mid-year.

A new Government Accountability Office (GAO) report analyzing the impact of these cuts, referred to collectively as "sequestration," is a testament to the drawbacks of haphazard budgeting. Budgeting by crisis – instead of by human need – impacted the services available to the public without regard for the importance, efficiency, or return of programs.

The resulting short-term “cost savings” did not reflect viable long-term deficit-reduction strategies. Instead, the budget cuts were overwhelmingly absorbed using temporary strategies, including hiring freezes, deferred maintenance on equipment, delayed investment, furloughs, and temporary reductions in services.

At final count, “more than 770,000 federal employees were furloughed for between one and seven days in response to sequestration, resulting in reduced wages,” according to the report.

The indiscriminate nature of the cuts affected vital services. The Department of Justice has reportedly trimmed its workforce by almost three percent since January 2011, when a hiring freeze was first implemented for budgetary reasons. Sequestration exacerbated this strain on the workforce. According to the report, “the U.S. Attorneys’ Offices had 45 fewer attorneys in fiscal year 2013 compared to fiscal year 2012 and filed over 1,600 fewer criminal and civil cases.”

Additionally, planning, implementation, and monitoring these cuts diverted time and resources away from providing services. In some areas, the short-run budget cuts actually cost the government more money than they saved. For example, the Internal Revenue Service (IRS) raises approximately $4 for government services for every dollar spent on its operation. The report described the potential loss of “billions of dollars in revenue due to fewer tax return reviews and diminished fraud detection.”

The GAO report extensively documents the impact of sequestration across the government. Below is a sampling of the cutbacks in services, which affected millions of Americans.

Department of Agriculture

  • “The WIC Farmers’ Market Nutrition Program for fiscal year 2013 was projected to have been reduced by about 142,000 participants from its fiscal year 2012 level of 1.56 million.”
  • “About 3,500 fewer farmers and ranchers were expected to receive assistance in developing conservation plans, resulting in less opportunity to achieve the benefits of conservation efforts.”
  • “Approximately 100 fewer grants were estimated to have been provided for university scientists and private partners to conduct research across a variety of topics.”
  • “USDA officials estimated that about 11,000 fewer agricultural producers and landowners were provided technical and financial assistance from across a number of programs, which may affect water quality and quantity, soil erosion, and wildlife habitat.”

Department of Energy

  • “DOE officials reported a sequestration reduction of approximately $173 million at DOE’s Hanford site near Richland, Washington: about $80 million at DOE’s Richland office, and about $93 million at its Office of River Protection. Cleanup activities at the Hanford site include cleaning up dangerous waste stored in 177 large underground storage tanks, called tank farms, and constructing a waste treatment and immobilization plant to stabilize large quantities of this waste and prepare it for disposal.”
  • “Reductions to NNSA’s Weapons Activities account have, among other things, reduced activities to clean out the storage vault at the PF-4 Plutonium Facility at Los Alamos National Laboratory, according to DOE officials. The vault stores excess and waste materials from production of nuclear weapons that are radioactive and extremely hazardous to human health. However, the vault was not designed to store the large amounts of material resulting from large-scale manufacturing operations.”

Department of Health and Human Services

  • “As of May 2013, the National Institutes of Health (NIH), which funds biomedical research, planned to reduce funding for its non-competing research project grants by an average of 4.7 percent below the anticipated fiscal year 2013 award amounts. In addition, NIH ultimately awarded 750 fewer competing research project grants, or 8.3 percent fewer, in 2013 compared to 2012.”
  • “The Centers for Disease Control and Prevention (CDC) …reduced Rape Prevention and Education formula grant awards to 55 state governmental entities by 5 percent from the total fiscal year 2012 award amount.”
  • “HHS estimated, based on planning data collected from Head Start program grantees, that Head Start programs, which promote the school readiness of children up to age 5 from low-income families, served approximately 57,000 fewer children as a result of lower funding levels.”

Department of Housing and Urban Development

  • “HUD estimates that sequestration’s cuts to Homeless Assistance Grants will lead to states and localities removing 60,000 formerly homeless persons from housing and emergency shelter programs, putting them at risk of returning to the streets.”
  • “HUD estimated, based on data reported by the state and municipal housing authorities that administer the Housing Choice Voucher program, that the number of very low-income households that received rental housing assistance through the program at the end of calendar year 2013 was about 42,000 (2.2 percent) lower than at the end of calendar year 2012, primarily due to sequestration.”

Department of Labor

  • “DOL reported estimates that the sequestered funding from the Emergency Unemployment Compensation program would reduce weekly benefits paid to 2.6 million long-term unemployed workers by nearly 11 percent.”
  •  “[T]he agency reported that BLS eliminated a number of surveys and measures earlier than planned, including the Mass Layoff Statistics, the International Labor Comparisons, and the Measuring Green Jobs Initiative.”
  • “DOL reported estimates that the $1.9 million reduction in the Homeless Veterans Reintegration Program would result in six fewer grants serving 600 fewer veterans.”

Environmental Protection Agency (EPA)

  • “Reducing fellowships, by about 118, which support science, technology, engineering, and math and which help to educate the next generation of environmental scientists. EPA planned to award 151 fellowships but awarded only 33.”
  • “[The EPA] eliminate[ed] over 100 water quality protection and restoration projects… EPA officials stated that reduced funding will affect states’ ability to reduce the nitrogen and phosphorus pollution that contaminates drinking water supplies, causes toxic algae blooms, and deprives waters of oxygen that fish need to survive.”
  • “[The EPA] reduc[ed] state grants for underground storage tank inspections and contaminated site cleanups, resulting in an estimated 2,600 fewer inspections and 290 fewer cleanups.”
  • “[The EPA] reduc[ed] hiring and furlough[ed] staff resulting in 1,000 fewer annual inspections (out of about 20,000) being conducted by EPA’s compliance enforcement staff. EPA officials stated that fewer inspections reduce the deterrence effect on noncompliance from the possibility of an inspection.”

Social Security Administration (SSA)

  • “[D]ue to reduced staff and overtime, SSA estimated that callers to SSA’s 800-number in fiscal year 2013 waited twice as long as callers in fiscal year 2012; the average busy rate rose from 5 percent in fiscal year 2012 to 12 percent by the end of fiscal year 2013.”
  • “[A]pplicants for disability benefits waited almost a week longer for a decision on an initial disability claim and nearly a month longer for a disability hearing decision compared to last year.”
  • “Resource constraints have made it more difficult to remain current on the number of continuing disability reviews the agency is required to conduct. When these reviews are not conducted as scheduled, beneficiaries may receive benefits for which they are no longer eligible, and the agency may forgo future program savings, which SSA officials estimates are about $9 for every $1 spent conducting the reviews over a 10-year period.”
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