Wednesday, March 6, 2013

Post-Sequestration Appropriations Battle Begins

While the deadline to alter or avoid the so-called "sequestration" cuts has come and gone, the current appropriations are scheduled to run out on March 27, 2013. The federal fiscal year, FY13, is from October 1, 2012 through September 30, 2013. That means the federal government runs out of appropriated funding approximately six months short of the end of the fiscal year.

In short terms, that means the government's bank accounts lock with no new allowances until a new law is passed allowing additional funding.

Many like to incorrectly use the terms "budget cuts" for the sequestration spending reductions. There has not been a federal budget since FY09, passed in the fall of 2008 while President Bush (43) was still in office.

Without a budget, the congress has been allocating appropriations to the federal agencies through "continuing appropriations resolutions". The latest is set to expire.

The House of Representatives has the constitutionally mandated task of initiating all appropriations bills, to include ones that will renew past appropriations bills.

With the $85 Billion in cuts to contend with, they are hoping to redirect the remaining funds so agencies such as NASA, the FBI, the VA, and the military branches have more flexibility in transferring their remaining funds into the more necessary accounts. For example, the proposal would allow the military to move funding from beautification projects on installations and using the funding, instead, to repair vehicles or to buy bullets for training or operational necessities. It sounds like common sense.

The bill, which may see a special session on March 6th, is HR933, Department of Defense, Military Construction and Veterans Affairs, and Full-Year Continuing Appropriations Act, 2013. However, a potential winter storm has closed most federal offices in Washington, DC.

In regards to keeping federal spending under control, Paul Ryan and others sent the bill to the Congressional Budget Office (CBO) to study. The answer was that the federal deficit will rise from $974 Billion to $984 Billion, and increase of $10 Billion, after the sequestration lowered the deficit from $1,043 to that $974 Billion amount. It still amounts to a cut of $75 Billion in spending, including $68 Billion in discretionary spending.

Honorable Paul Ryan
Committee on the Budget
U.S. House of Representatives
Washington, DC 20515 

Dear Mr. Chairman: 

As you requested, the Congressional Budget Office (CBO) is providing information in this letter on appropriations for fiscal year 2013 and the effect on those appropriations of the automatic spending reductions (known as sequestration) that were implemented on March 1.

If H.R. 933, the Department of Defense, Military Construction and Veterans Affairs, and Full-Year Continuing Appropriations Act, 2013 (as introduced on March 4) is enacted, appropriations for 2013 for programs limited by the statutory caps will total $1,043 billion.
In addition, the proposed appropriations and previously enacted legislation include funding
for certain activities that are not constrained by the caps; together, H.R. 933 and Public Law 113-2, the Disaster Relief Appropriations Act, 2013, would provide a total of $153 billion in such funding.

Both appropriations limited by the caps and those that are not constrained include resources that are subject to the automatic spending reductions. All told, appropriations for 2013 will total $1,196 billion if H.R. 933 is enacted.

In OMB Report to the Congress on the Joint Committee Sequestration for Fiscal Year 2013 (March 1, 2013), the Office of Management and Budget (OMB) provided details on the automatic spending reductions for 2013. Specifically, those reductions will lower the $1,043 billion in appropriations limited by the caps (as well as unobligated balances for defense programs) by $59 billion, resulting in an annual total of $984 billion in net new budget authority (see Table1). In addition, funding for activities that are not constrained by the statutory caps will be reduced by about $9 billion, to a total of $144 billion. Thus, total discretionary budget authority in 2013 will be $1,127 billion, which is $68 billion less than the $1,196 billion of authority that would be provided if H.R. 933 was enacted in the absence of sequestration (see Table 2 for CBO’s estimates of budget authority by appropriations subcommittee, excluding the effects of sequestration).

Automatic reductions to mandatory programs will reduce funding for those programs by another $17billion, by OMB’s calculation. Therefore, OMB reports that the total sequestration will amount to $85 billion in budget authority. CBO previously estimated that the automatic spending reductions would lower outlays by $42 billion in 2013 (and by additional amounts in subsequent years). Incorporating OMB’s determination of the distribution of those reductions across budget categories will probably change that estimate somewhat, but CBO has not yet had an opportunity to update its calculations. 

Since it does apply some amount of common sense in how the remaining post-sequestration funds are appropriated and allocated, it concerns the White House. The Office of Management and Budget (OMB), the White House's mirror to the CBO, sent this letter to congress in regards to HR 933:

W AS H I N G T O N , D . C . 2 0 5 0 3

March 5, 2013
(House Rules)

H.R. 933 – Department of Defense, Military Construction and Veterans Affairs,
and Full-Year Continuing Appropriations Act, 2013
(Rep. Rogers, R-KY)

The Administration is deeply concerned about the impact of H.R. 933, making appropriations for the Department of Defense, the Department of Veterans Affairs, and other departments and agencies for the fiscal year ending September 30, 2013, and for other purposes, and is committed to working with the Congress to address these concerns in a way that strengthens the middle class and helps to grow the economy.

While the Administration is pleased to see that H.R. 933 is consistent with the mutually agreed upon budget framework in the Budget Control Act of 2011 (BCA), the bill raises concerns about the Government's ability to protect consumers, avoid deep cuts in critical services that families depend on, and implement critical domestic priorities such as access to quality and affordable health care. Furthermore, while the legislation includes the Department of Defense and the Military Construction and Veterans Affairs and Related Agencies fiscal year 2013 bills, the remainder of Federal agencies are left to operate at last year's level, which will impede their ability to provide services to Americans and efficiently allocate funding to key programs including those in infrastructure, clean energy, education, and research and development.

The Administration looks forward to working with the Congress to refine the legislation to address these concerns. As the Congress considers this bill, the Administration will continue to press the Congress to eliminate the automatic and arbitrary cuts to current funding levels imposed by the Joint Committee sequestration, which will harm middle class and working Americans while costing the Nation's economy hundreds of thousands of jobs.

The President continues to work to replace sequestration with a larger, balanced deficit reduction agreement that strengthens the middle class by accelerating job creation and growth while coupling serious entitlement reform that strengthens these critical programs with tax reform that raises revenue by closing tax loopholes for the wealthiest Americans.

* * * * * * *
The citizens of this country need to draw their attention to a few fallacies in the OMB's memorandum. The federal government is constitutionally mandated to provide for national defense, fund air, ground and naval forces, and provide for veterans and military retirees. The federal government does not have the constitutional authority to dictate "green energy". The constitution does not allow it to be involved in education, especially funding it. According to the 10th Amendment, that is a state or individual responsibility. The federal government does not have the authority to control, dictate, or pay for individual citizens' health care. That is an individual responsibility. The USSC decision regarding the PPACA's constitutionality stated it is a tax bill. The funds the bill directly addresses are those the federal government is constitutionally mandated to appropriate and levy funds to provide.

The "services" the OMB most likely refers to are the very ones it talks about when it states "entitlement reforms". However, the idea they support seems to be increasing redistribution of the wealth and property legally accrued by citizens to those who have not achieved such through their own merits. It also, most likely, considers any reforms to mean increasing the parameters of those who qualify for receiving those handouts.

HR 933 is far from a perfect solution. A better one should probably be considered. More cuts in "social programs" need to be addressed, just as funding "research" programs such as studying a shrimp on a treadmill. Essential government services that are mandated by the US Constitution should be funded. Bills the government owes should be paid. Those bills include OASDI (Social Security) payments to those who paid into the system for 20+ years or their designated beneficiaries. Those bills include Medicare payments to those who also paid into the system for 20+ years. They are owed their money back plus interest.

"Loopholes" need to be closed for all taxpayers. Directing them at only one income demographic is a violation of the 14th Amendment. In fact, the whole "progressive" tax is a violation of that amendment. It should be a flat tax on all incomes or capital gains, regardless of income. Obama wants tax hikes as part of any appropriation or budget bill, and has stated as much in his calls for a "more balanced plan" that, in reality, is anything but balanced or "fair".