WASHINGTON - In the weeks that led to the huge across-the-board cuts to federal spending early this year, President Barack Obama’s administration warned of dire consequences for the Justice Department: FBI agents dropped from investigations, U.S. marshals pulled from their beats, federal prison guards furloughed.
Then when the cuts known as sequestration hit, the Justice Department suddenly found more than half a billion dollars in unspent money from the previous year. Furloughs were called off. The Boston Marathon bombing investigation proceeded unhindered. In short, there were few of the predicted calamities, although several anti-poverty and science programs like Head Start and the National Institutes of Health suffered damage.
But while the most dire predictions may not have materialized in 2013, the tricks that many agencies employed - deferring maintenance, using unspent money from earlier years, cutting staff by attrition - are likely to be exhausted by 2014, when federal departments must trim an additional $24 billion from already tight budgets.
House and Senate budget negotiators, forced together by the deal that ended the recent 16-day government shutdown, will finally sit down Wednesday to devise a spending plan for the current fiscal year. Though Republicans and Democrats remain far apart on virtually every matter of policy, they agree on one: Sequestration must end.
“It was kind of like when you go through your drawers and your pants pockets and you collect the dimes - you can’t do that again,” said Rep. Frank Wolf, R-Va., who helped the Justice Department scrape together its spare change. “The second year will be much more difficult.”
To head that off, Rep. Paul Ryan of Wisconsin, who is the chairman of the Budget Committee and will lead the talks for Republicans, said negotiators would have to think small.
“If we focus on doing something big, ‘grand bargainesque,’ we will fail,”Ryan said in an interview Thursday. Instead, he said, talks “should aim for the achievable.”
Sen. Harry Reid of Nevada, the majority leader, expressed a similar sentiment, telling Nevada Public Radio that any larger aspirations would be “happy talk.” And the Obama administration has made clear that sequestration replacement is its highest priority in the coming talks.
With the stakes lower, both sides will have to give far less to reach a deal, said Rep. Tom Cole, R-Okla., who will serve on the conference committee. Significant tax increases are no more acceptable to Republicans than Ryan’s transformation of Medicare is to Democrats, he said.
“But can you get to revenues in some way? Yes,” Cole said, suggesting incentives for companies to send back profits from overseas or expedite oil, gas or timber sales.
This year, sequestration shaved $85 billion from domestic and military programs at Congress’ annual discretion, lowering spending from $1.043 trillion to $986 billion. In January, the $1.058 trillion in discretionary spending set by law in 2011 will drop to $967 billion without congressional intervention.
“We agree there are smarter ways to cut spending,” Ryan said.
An agreement on that principle, of course, is no guarantee that a deal can be reached.
The fiscal year that ended Sept. 30 was an exercise in creative accounting, nest-egg robbing and seed-corn gobbling. Sequestration cut $1.75 billion from the Navy’s shipbuilding program, so the Navy came up with nearly $1 billion in unspent money from previous years and scrapped contracts for a destroyer, a submarine and a planned overhaul of aircraft carriers, according to staff members of the House and Senate Appropriations Committees. In January, an additional $1.6 billion must be extracted from the same account, and with no coins under the cushions, every ship in the fleet is expected to be affected.
The Army deferred maintenance on 172 aircraft, more than 900 vehicles, almost 2,000 weapons and more than 10,000 pieces of military equipment. That unfinished work is piling up, along with $73 million in maintenance costs that will be exacerbated by more cuts in January.
“They’ve cut down on the commissaries, stopped painting the buildings, quit cutting the grass,” said Rep. Jack Kingston, R-Ga., a senior member of the House Appropriations Committee. “Now it’s coming down to the real issues.”
In all, the Pentagon faces $52 billion in cuts next year from the total requested by Obama and the Joint Chiefs of Staff.
Republicans on the House Armed Services Committee wrote to budget negotiators Wednesday to beg for relief: “Sequestration would simply not allow our military to do what we have come to expect of them: counter aggression at its source, far from our shores; deter and defeat multiple enemies simultaneously so that in facing one threat we do not create vulnerabilities against another; and maintain an all-volunteer force that is well trained and equipped.”
In April, as commercial airline flights stacked up on runways affected by furloughed air traffic controllers, Congress passed one of the few adjustments to sequestration, allowing the Federal Aviation Administration to transfer $253 million from airport construction to operations. That eliminated controller furloughs and kept control towers open. But by law, the agency is required to install protective buffer areas at the end of all runways by 2015, impossible if its construction money continues to be redirected.
The Commodity Futures Trading Commission avoided sending any of its regulators home this year by exhausting money from the previous year, delaying new hires and transferring $10 million from information technology to salaries and expenses, according to a White House budget official. In 2014, the agency may have to furlough its entire staff for up to 14 days.
The National Weather Service was kept afloat this year in large part because money was shifted from the Hurricane Forecast Improvement Program, an accounting trick made possible because the Superstorm Sandy relief package replenished the hurricane forecasting account. That will not be available again.
In 2014, political pressure may also come to bear in very personal ways. Kansas’ two Republican senators, Pat Roberts and Jerry Moran, have fought hard to protect the National Bio and Agro-Defense Facility, a research laboratory for deadly large-animal diseases that is finally scheduled to get off the ground next year in Manhattan, Kan. But the $1 billion project’s first big infusion, $404 million, will happen only if sequestration can be undone.
With such small things at stake, giving up on the big things - major tax increases for Democrats, major entitlement changes for Republicans - could be the path to a deal, Cole said Friday.
“All of us would like to have a deal that works, that people on both sides of the aisle, and more broadly around the country, can have confidence in,” he said. “Having lower expectations, in that sense, is a good thing.”
Front Section, Pages 1 on 10/27/2013