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The big sequester gamble: How badly will the cuts hurt?

By Lori Montgomery and Paul Kane,February 23, 2013

President Barack Obama speaks in Chicago Feb. 15, 2013. The president and… (Evan Vucci/AP )

With the ax set to fall on federal spending in five days, the question in Washington is not whether the sequester will hit, but how much it will hurt.

Over the past week, President Obama has painted a picture of impending disaster, warning of travel delays, laid-off firefighters and pre-schoolers tossed out of Head Start. Conservatives accuse Obama of exaggerating the impact, and some White House allies worry the slow-moving sequester may fail to live up to the hype.

“The good news is, the world doesn’t end March 2. The bad news is, the world doesn’t end March 2,” said Emily Holubowich, a Washington health-care lobbyist who leads a coalition of 3,000 nonprofit groups fighting the cuts. “The worst-case scenario for us is the sequester hits and nothing bad really happens. And Republicans say: See, that wasn’t so bad.”

In the long partisan conflict over government spending, the sequester is where the rubber meets the road. Obama is betting Americans will be outraged by the abrupt and substantial cuts to a wide range of government services, from law enforcement to food safety to public schools. And he is hoping they will rise up to demand what he calls a “balanced approach” to deficit reduction that replaces some cuts with higher taxes.

But if voters react with a shrug, congressional Republicans will have won a major victory in their campaign to shrink the size of government. Instead of cancelling the sequester, the GOP will likely push for more.

“It would be a big problem for the White House if the sequester came and went and nobody really noticed anything. Then people will start saying, ‘Well, maybe we can cut spending,” said John H. Makin, a resident scholar at the conservative American Enterprise Institute who penned a recent Wall Street Journal piece titled “Learning to Love the Sequester.”

Adding to the liberal angst is concern that the scale of the cuts may be overstated, at least in the short term. While the sequester orders the White House to withdraw $85 billion in spending authority from affected agencies in the fiscal year that ends in September, the nonpartisan Congressional Budget Office predicts that agencies will reduce actual spending by only about $44 billion, with the remaining cuts carried over into future years.

Compared with total 2013 discretionary spending, that’s a cut of less than 4 percent.

The impact will be magnified, however, because of certain exemptions — military payrolls, for example — and because it must be compressed into seven months rather than being spread out over 12. As a result, some agencies, notably the Pentagon, are contemplating cuts to nonexempt accounts of as much as 17.5 percent.

Still, managers at many agencies have been bracing for the cuts, postponing purchases and new hires so they can protect employees and the public from the very disruptions to core services that would draw headlines.

“This is the Catch-22,” said Richard Kogan, a former Obama budget official now at the left-leaning Center on Budget and Policy Priorities. “The problem would be solved faster if it was literally a disaster. But making it a disaster is not what agency managers really want to do.”

Administration officials insist the pain will be immediate and acute. Though furloughs of federal workers won’t begin in earnest until April, notices could begin rolling out before the March 1 deadline. On Friday, cash-strapped governors and mayors will be notified of cuts to social-service grants and reductions in education funding that will impact the coming school year. And actual federal payouts will decline immediately for at least two programs: Emergency unemployment benefits for the long-term unemployed and nutrition assistance for women, infants and children, known as WIC.

“We have a very diverse parade of horribles,” said a top White House budget official, speaking on the condition of anonymity to discuss implementation plans. “It’s going to be all over the map . . . and it’s going to hit both Democratic and Republican constituencies in a significant way.”

It’s true that the impact does “tend to get worse over time,” the official said. “But the pain points are there.”

Independent budget analysts agree that some high-profile agencies will be unable to avoid sharp cuts to critical services, including border patrols and airport security screenings.

So far, however, people aren’t paying much attention. Just 27 percent of those surveyed in a Pew Research Center/USA Today poll released last week said they had heard “a lot” about the sequester, barely half the percentage who were paying “a lot” of attention in the summer of 2011, when the sequester was adopted as part of a deal to raise the federal debt ceiling.