Spending Cuts and the Termites in the Basement

The gap between the rhetoric and the reality of sequestration is an opportunity for Washington to follow in the footsteps of state and local governments by rethinking how services are delivered.
by | July 10, 2013

The across-the-board federal budget cuts known as sequestration are now more than four months old. The gap between the rhetoric about the potential effects and the reality of the actual impacts of sequestration looms large. Instead of following the example of state and local governments, many of which have confronted significant budget reductions in recent years by taking the opportunity to rethink how they delivered services, the initial response of many federal officials was to predict dire effects that now have been exposed as at least exaggerated.

Perhaps it was incredulity about the irresponsibility of sequestration that caused the Obama administration and the leadership of federal agencies to paint such a grim picture. The most widely cited of these probably was Secretary of Education Arne Duncan's assertion, on Feb. 24, that there were "literally teachers now who are getting pink slips" because of sequestration. When pressed for an example, Duncan pointed to teachers in one county (Kanawha, in West Virginia), but acknowledged that these layoffs may not have been due to federal budget policy.

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Most agencies put their employees on notice that furloughs -- adding up to as much as 20 percent of total workdays for the remainder of the fiscal year -- were coming. In some cases, such as in the departments of Homeland Security and Transportation, Congress stepped in to provide either more money or greater flexibility for reprogramming spending. And in some other agencies, these severe furlough predictions just did not come true. The Justice and Education departments, for example, had predicted furloughs but later cancelled them. Other agencies, such as the Department of Defense and the Environmental Protection Agency, have cut the number of planned furlough days in half.

There are, of course, numerous agencies where furloughs are going forward as originally predicted, and it is undoubtedly true that these furloughs and other budget cuts will create pain, or at least inconvenience, not only for public workers but for recipients of services and for other levels of government. But overall, there has been a gap between the rhetoric and the reality of sequestration that carries an unintended message: There are> places where efficiencies can be realized, where budgets can be cut. Time and again, the avoidance of the worst pain associated with sequestration has resulted from identification of low-impact cuts. This is a success story, in that minimizing effects on delivery of public services is precisely what government officials should do in such a situation. But the end result is that sequestration may reveal opportunities for increasing effectiveness in federal outlays.

Further, the recent revelation that a low-level contractor with only a high-school education who was in a position of sufficient responsibility to access and disclose highly sensitive intelligence information was being paid $120,000 per year should give us pause concerning the bang we are getting for our federal buck. There are two profound challenges to consider. First, at the simple financial (and equity) level, would federal employees with commensurate backgrounds earn similar amounts of money? I am not aware of any who do. Second, at the policy level, what does this episode reveal about who is performing essential public-sector duties? Evidence mounts that there may be substantial room for reducing costs and better protecting the public by ensuring that important public functions are executed by public employees.

The most important lesson to take away from the gap between rhetoric and reality on sequestration is that identifying the actual impacts from budget cuts comes not from sound bites or PR efforts but from sound analysis concerning government effectiveness. To borrow a phrase from Johnson-administration budget director Charles Schultze, the real threats are less "the wolf at the door" and more the "termites in the basement." Even before the wolf arrives at our door (if ever), our home may already be actively threatened by termites. The federal government clearly is long overdue for sound analysis and deliberation about how well taxpayer money is spent -- a practice and dialogue that is well underway at the state and local level.

Crying wolf -- an understandable temptation -- creates a message that damages the credibility of the messenger and makes it much less likely that the next warning will be taken seriously. Instead of trying to fight budget cuts by exaggerating their effects, federal administrators and elected officials alike have an opportunity to evaluate systematically what works, what doesn't and just who should be doing the work of government.

Philip Joyce
Philip Joyce  |  Contributor
pgjoyce@umd.edu  | 

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