Government Report Analyzes Sequestration’s Impact

The Government Accountability Office (GAO) published a report on May 28 on the impacts of sequestration in 2013. The report looked at several agencies that provide funding to state and local governments and deliver services directly to individuals. The GAO found that many of these agencies reduced or delayed services to account for the across the board cuts. For example, the Centers for Medicare & Medicaid Services (CMS) reported reducing the frequency of surveys to determine quality of care and compliance with federal standards at psychiatric hospitals from once every three years to once every four to five years and at specialized organ transplant centers from once every three years to once every four to six years,” according to the report.  See the full report on the GAO website.

FY 2014 Short Term Spending Bill to be Taken Up by the Senate

The Senate is expected to take up the bill (H J Res 59) passed by the House on September 20. The House bill provides funding through mid-December at funding levels that reflect the approximate 5% automatic cuts (sequestration) from FY 2013. The Senate path to passage is uncertain at this point. However, the Senate is widely expected to exclude the controversial provision to defund the Affordable Care Act in a substitute amendment. It may also seek additional changes in the funding levels of the House bill. If the House and Senate fail to agree on a spending bill by the end of the fiscal year on September 30, a government shutdown is slated to begin on October 1, the start of FY 2014.

Short term FY 2014 spending bill expected to be introduced

While Congress is expected to focus its attention on Syria when it reconvenes today, a short term spending bill is anticipated this week in the House.   The rumored two-month continuing resolution (CR) is reported to be at the discretionary level of $988 billion, the current FY 2013 funding post-sequestration level. The bill is expected to be a simple extension of current funding levels except for a small number of non-significant changes. The funding measure would avert a government shutdown which would begin on October 1, the start of FY 2014, if no funding bill is enacted by that date. It also would postpone fiscal fights until later in the fall when Congress will need to address the debt ceiling and possible efforts to block funding for the Affordable Care Act.

House passes CR through end of Fiscal Year 2013

On March 6, the House passed a 6-month continuing resolution (CR) providing funding for federal programs for the remainder of FY 2013. The current CR ends on March 27. The measure includes the automatic across-the-board spending cuts (sequestration), which signals that the cuts are likely to remain in effect unless a budget deal is reached as both parties have been unwilling, at this point, to risk a government shutdown. Differing views on whether to increase tax revenue and reform entitlement programs (namely Social Security, Medicare, and Medicaid), continue to prevent Congressional leaders from reaching an agreement, though there have been a few small signs of increasing flexibility. The Senate is expected to debate the measure this week.

Automatic, Across-the-board Cuts Set into Motion

With the Administration and Congress failing to reach a deal, President Obama issued a brief sequestration order on March 1, and a report that lays out the federal accounts to be cut and their percentages for FY 2013. While the report lists each account that is subject to the automatic cuts, it remains to be seen how and when many of the agencies will apportion the cuts to programs that fall under them. For example, there is cut of 5% for “CDC-Wide Activities and Program Support” and it is not clear at this point how much discretion the CDC will have in apportioning cuts to the many activities and programs (such as the National Center on Birth Defects and Developmental Disabilities) that fall under it.

It should be noted since the cuts of approximately 5.3% for non-defense discretionary programs are for the entire fiscal year, cuts will be on the order of nearly 10% for the remaining 7 months of the fiscal year. See the sequestration report at the White House website. The Department of Health and Human Services listing of accounts begins on page 24.

Report details effects of across-the-board cuts on non-defense discretionary (NDD) programs

On July 25, Senator Tom Harkin (D-IA) released a detailed analysis of the impact of sequestration on dozens of health, education, and labor programs in 2013. The report includes state level information on funding reductions, service reductions, and lost jobs. The calculations are based on the Congressional Budget Office’s (CBO) estimated 7.8% reduction for NDD programs. The cuts are scheduled to take effect under the Budget Control Act in January of 2013 unless Congress changes the law. The report includes estimates for special education grants to states, preschool State Grants, and grants for infants and families. See: Under Threat: Sequestration’s Impact on Nondefense Jobs and Services