- Any agreement to alter sequestration puts both camps right back where they were in the spring of 2011
- Automatic budget cuts under sequestration divert attention from the need to slow the automatic growth of major entitlements.
- The sequester fails to address the true driver of the national debt while needlessly sacrificing America's national security.
While the latest Washington crisis has subsided for the moment, the fights ahead echo those of the recent past. In just a few short months, policymakers will again debate the size, scope and reach of government in order to craft spending levels for the remainder of the fiscal year.
A key question in forthcoming budget negotiations between the parties and chambers is: Should sequestration remain in place as is, and if not, how might it be altered?
It is clear that the amounts cut under sequestration will stick under any future deal. But the scope and pace of the cuts, particularly for the Defense Department, could be altered.
But because sequestration mostly focuses on an increasingly narrow shrinking pot of domestic discretionary spending and not the elephant in the room known as mandatory entitlements (Social Security, Medicare and Medicaid), the bill payers remain the same. Therefore, any agreement to alter sequestration puts both camps right back where they were in the spring of 2011. And again during deliberations of the so-called "super committee." And again during the fiscal cliff negotiations.
As a new report from the Bipartisan Policy Center aptly highlights, sequestration exacerbates existing budgetary problems by failing to address the true driver of the national debt: entitlement spending. Automatic budget cuts under sequestration divert attention from the need for real and urgent action to slow the automatic growth of major entitlements.
Spending on major entitlement programs already accounts for nearly half of the federal budget, and will consume about 60 percent of the budget by 2022. Despite this fact, reductions to mandatory spending only account for about 15 percent of sequestration's tab. If policymakers care about runaway government spending, sequestration fails to rein in the true culprit.
Politicians should take note, because the effects of sequestration have been sporadic, slow to trickle down and relatively muted thus far. But the negative consequences increase each day. As the same report notes, sequestration's impact will double in 2014 and triple in 2015 as compared to this past year.
While many in Washington have been conditioned to accept sequestration's consequences as a necessary evil to see spending reduced, members may be surprised at the impact yet to come. This forthcoming pain will be magnified by the absence of several factors that helped cushion sequestration's blow in 2013. BPC estimates that many defense contractors ended 2012 with a backlog that covered as much as 43 to 55 percent of their expected sales in 2013. This backlog will simply not exist in future years. Nor will Pentagon leaders be able to rely as heavily on "un-obligated" funding that helped blunt the impact of sequestration's knife on the aerospace and defense industry in 2013.
Most importantly, the latest BPC report makes clear the national security consequences of sequestration. Like the sequester's gradual economic impacts, consequences for America's military will only grow over time. As America's senior military leaders recently testified before the House Armed Services Committee, under continued sequestration, not one of the military services would be able to meet its requirements under the president's 2012 strategic guidance.
This tension within the defense budget alongside reduced purchasing power comes in large part due to rapidly rising internal cost growth that, as Clark Murdock of CSIS warns, is hollowing out America's military from within.
The BPC report paints an exhaustive picture of how growing internal costs are eroding U.S. combat power. As BPC warns, the "combination of sequester cuts and unaddressed cost increases will erode force readiness, stall modernization, and reduce the fighting forces by at least 50 percent by 2021."
As Congress steps back from the brink yet again and prepares to enter the next round of budget talks, policymakers should be clear-eyed that sequestration is no victory for budget hawks. Indeed, the sequester fails to address the true driver of the national debt while needlessly sacrificing America's national security. Sequestration is bad for the economy, for the men and women of our military, and for the nation's long-term fiscal health.
Mackenzie Eaglen is a resident fellow at the Marilyn Ware Center for Security Studies at the American Enterprise Institute.