Off the Charts Blog | Center on Budget and Policy Priorities

The House Appropriations Committee-approved plan to divide up 2014 discretionary funding among the 12 appropriations subcommittees would lead to deep cuts in a broad range of non-defense areas and shift tens of billions of dollars from domestic programs to defense and other security programs, our new analysis explains.

Total discretionary funding under the plan would equal the amount that the Budget Control Act (BCA) allows if sequestration continues next year as scheduled.  But the plan gives defense programs much more funding than the BCA allows under sequestration, raising them close to the BCA cap before sequestration.  And it gives non-defense programs much less funding than the BCA allows under sequestration.

But, if policymakers took the opposite approach, raising non-defense programs close to the pre-sequestration level, they would have to cut defense programs by about 10 percent below their current level.

The plan makes clear that if overall discretionary funding remains at the post-sequestration level in 2014, policymakers can protect funding in one major area only by making deeper cuts in other areas.  The fundamental problem is that the overall funding level for discretionary programs under sequestration is too low.

The Administration threatened earlier this week to veto the first appropriations bill based on the plan (H.R. 2216, which funds military construction, veterans’ programs, and related programs), stating, “adhering to the overall spending limits in the House Budget’s topline discretionary level for fiscal year (FY) 2014, would hurt our economy and require draconian cuts to middle-class priorities.”

This graph shows how deeply the plan would cut non-defense areas in order to accommodate its funding increases for defense and other security programs.  Overall funding for the Departments of Education, Health and Human Services, and Labor would be 18.6 percent below this year’s level after sequestration, while the bills funding the Interior Department, the Environmental Protection Agency, and the State Department would be 14 percent below the current level.  The declines are even bigger once inflation is taken into account.

A far better approach would be to replace sequestration with a balanced package of spending cuts and revenue increases and fund discretionary programs at the BCA levels without sequestration, as the President’s budget and the Senate-passed budget resolution do.

House Budget Committee Chairman Paul Ryan’s new budget would cut the part of the budget that supports everything from education and law enforcement to biomedical research to nutrition assistance by more than $1 trillion below the funding caps in the 2011 Budget Control Act (BCA) over the next decade.  That’s hundreds of billions of dollars below the funding levels that would result from nine years of sequestration.

“Non-defense discretionary” programs — which Congress funds through annual appropriations bills — are already slated to fall to historically low levels under the BCA caps (and that’s before sequestration).  Funding for those programs will shrink by 2017 to its lowest level on record as a share of the economy, in data that go back to 1962, and fall further thereafter.  The Ryan budget would cut their funding by $1.1 trillion more over the next decade (see chart).

Under the Ryan budget, these programs would be roughly 18 percent below the BCA caps each year.

These cuts are far more severe than would occur if sequestration were to remain in place in 2013 and beyond for these programs.  Indeed, over the decade the Ryan budget would cut non-defense discretionary programs $700 billion below the post-sequestration levels.

The Ryan budget takes a very different approach to defense programs, however, canceling the sequestration cuts for all years starting in 2014 and funding defense at the BCA cap levels.

The Ryan budget doesn’t specify what programs the $1.1 trillion cut in non-defense discretionary funding would come from.  His budget states an intent to spare veterans’ programs from any cuts; if so, then other non-defense discretionary programs would need to be cut even more deeply to meet its funding levels.

A quarter of non-defense discretionary funding goes for programs that help low-income Americans meet basic needs and climb the economic ladder, such as Head Start, WIC, child care, homelessness prevention, low-income housing assistance, and services for frail elderly and disabled people.  Likewise, a quarter goes to states and localities to provide various public services.  (These two categories overlap, since states and localities provide most low-income assistance.  In all, one-third of non-defense discretionary funding goes for low-income assistance or to state and local governments.)

In addition, non-defense discretionary funding supports investments that can boost future productivity growth, such as in education and basic research, as well as services ranging from border patrol to food and water safety.

Given the extent to which this part of the budget is already shrinking, there’s simply no way to cut it by more than an additional $1 trillion without causing significant harm both now and in the future.

The House approved a bill yesterday from Appropriations Committee Chairman Hal Rogers (R-KY) to fund the government for the rest of the fiscal year.  The bill includes full appropriations bills for the Departments of Defense (DoD) and Veterans Affairs (VA), reflecting updated priorities for those departments.  But, for all other departments, it merely extends the continuing resolution (CR) — which basically funds all discretionary (non-entitlement) programs at last year’s funding levels — for the rest of the year.

This approach is unnecessary:  the House and Senate Appropriations Committees have largely agreed on appropriations bills (and the updated priorities they reflect) for nearly all departments.  And, as we explain below, relying on a CR would make the 2013 sequestration cuts even more harmful than they would otherwise be.

As the Senate crafts its own version of the 2013 funding bill, therefore, it should include full appropriations bills not only for DoD and VA but for as many departments as possible.  If there are some appropriations bills on which the House and Senate cannot agree and lawmakers continue funding through a CR, the Senate should target adjustments for program areas where today’s circumstances require significant changes to last year’s funding levels, either up or down.  (These adjustments are known in budget parlance as “anomalies.”)

The Rogers bill includes a small number of anomalies, but the Senate should consider a fuller list that better reflects the areas where last year’s appropriation levels do not mesh with current needs.

Senate Appropriations Committee Chair Barbara Mikulski (D-MD) is pressing for this approach and some Republicans agree.  Politico reports that Senator Lamar Alexander (R-TN) would prefer to include full appropriations bills for all departments, given that negotiations are nearly complete.  He concluded that:  “We probably won’t get that far as a practical matter, but the further we go down that path, the better we will be doing our job and the easier the sequester will be.”

Senator Alexander is right — funding domestic agencies under a mechanical CR approach can exacerbate the impact of the 2013 sequestration cuts.  Here’s why:

Under the sequestration rules, departments and agencies will apply the sequestration cuts, which went into effect on March 1, to whatever funding level Congress has appropriated for the year.  With their updated priorities in place, DoD and VA would be better able to absorb the sequestration cuts under the House bill than non-defense agencies, which would absorb those cuts off of funding levels that reflect last year’s priorities.

After all, the problems that sequestration creates are especially severe if that starting point doesn’t reflect current circumstances.  If one program has more funding than it needs and another has too little, sequestration exacerbates the funding shortfall in the latter program even though the former program could absorb a larger cut.

For example, last year’s funding bill for the Departments of Transportation and of Housing and Urban Development (HUD) cut operating funds for public housing by $750 million but targeted this cut on housing agencies with reserves that they could draw down to help cover their costs.

This one-time savings cannot be repeated, yet the cut is carried forward to 2013 mechanically in the CR.  If extended for the rest of the year, it would mean that, even before sequestration, housing agencies would receive only 81 cents for every $1 they need to cover the gap between their operating costs and the rents that low-income residents can afford.

As a result, agencies would have to take harmful measures such as delaying or cancelling maintenance and repairs, furloughing staff, and delaying making vacant units available to tenants on the waiting list.  Sequestration would require even more severe steps.  An appropriations bill that replaces the CR approach to funding housing programs could ease this problem by adding resources here and making offsetting cuts in another area.

Particularly in a year in which across-the-board sequestration cuts are occurring, Congress should do its best to ensure that program funding levels for fiscal year 2013 reflect current circumstances.  Specifically, it should include full appropriations bills whenever possible and consider targeted changes to funding levels in those departments that will still be funded under a CR.