Will Cleveland and the rest of Northeast Ohio weather the summer without the National Air Show on Labor Day weekend? The Air Force has canceled all such shows for the fiscal year as part of complying with the sequester, a package of $85 billion in federal spending cuts approved by the White House and Congress. Yes, the region will fare well enough, just as others will cope with reductions evenly split between defense and domestic programs.
Many Republicans in Congress have noted that the reduction amounts to 3 percent of the federal budget. That’s hardly severe, they add, especially with the country facing large annual deficits and an accumulated debt of $16 trillion. Of course, the country must get its finances in order. The challenge is doing so carefully, or without harming the fragile recovery. It involves recognizing that the task is best accomplished over the long term, leaving room for public investment that aids growth, and, tellingly, fuels additional revenue.
Even John Boehner, the House speaker, recently acknowledged that the country does not face an “immediate” deficit crisis.
With all that in mind, the sequester stands as utterly misguided. If anything, that was the point at its conception two years ago as part of the deal to raise the debt-ceiling. It was supposed to be so bad that Democrats and Republicans surely would come together to craft something better.
They did not, and the Congressional Budget Office has projected the sequester will shave 0.6 percentage points from the annual growth rate. That translates into fewer jobs.
More, the way the sequester has been structured, the 3 percent reduction targets a narrow swath of government spending. Medicaid and Social Security, two of the largest federal programs, are exempt. So are food stamps and welfare, and rightly so. As a result, those programs under the knife will be cut more deeply, defense by almost 8 percent, domestic programs by 5 percent. And the cuts arrive in the middle of the fiscal year, in effect, doubling the size of their impact.
Consider a handful of the reductions, compiled by the Washington Post: the National Institutes for Health, $1.6 billion; border security, $580 million; Head Start, $406 million, 70,000 children out of the program; special education, $840 million; the National Science Foundation, $388 million.
Support for public housing is slated for a $1.9 billion reduction. This affects one of the most vulnerable populations, the Akron Metropolitan Housing Authority estimating that 600 fewer vouchers will be issued for the year. That means fewer families will have access to public housing. The ripple effect is plain, landlords collecting less rent, builders and others providing fewer services, plus purchasing fewer materials and other goods.
The local economy suffers.
Lawmakers have been scrambling to allow more flexibility in targeting the spending reductions. What they haven’t addressed is that these domestic programs are not busting the budget, or ripe for big savings. If President Obama overplayed the harm, that doesn’t mean the pain is insignificant. It is real and, worse, unnecessary. Under the sequester, a billionaire hedge fund operator still pays taxes at the lower capital gains rate while many of the poor lack access to public housing.