The 'sequester' has landed: Just how 'automatic' will spending cuts be?

Department heads and agency chiefs will have some flexibility to move 'sequester' cuts between accounts and to decide their pacing. But wiggle room is limited under the law, budget experts say.

President Obama on Friday railed against the idea of “arbitrary” across-the-board cuts to federal spending. But the idea is now a budgetary reality.

As a result of a political impasse between Mr. Obama and Congress, the deficit-taming vehicle called the “sequester” is poised to hit the road. So, what does it mean for various government agencies to actually implement this thing? Does the law allow bureaucrats any wiggle room to prevent, say, a predicted shortage of air traffic control workers?

By law, the sequester is designed to cut about $85 billion during the current fiscal year (which ends Sept. 30), half from the defense side of the budget, half from the nondefense side. This will amount to a reduction of 8 percent in the defense budget (excluding for personnel) and 5 to 6 percent on the nondefense side, estimates the Congressional Budget Office. 

“The law says the sequestration is exactly proportional account by account” in the federal budget, says Richard Kogan, an expert at the Center on Budget and Policy Priorities. “And the law means it.”

That said, the budget-trimming mechanism called sequester does give agencies some flexibility, he adds.

First, spending by each federal department is guided by appropriations laws, which often provide a degree of leeway to transfer modest amounts of money from one of a department's “accounts” to another. For the Department of Defense, for example, one example of an account is Army "missile procurement" and another is Army "ammunition."

A second form of wiggle room is called “reprogramming” within a given budget account. Agencies can move money from one activity or project to another – even though the sequester in theory hits each activity to the same degree. The Army could, for example, spend more on one kind of helicopter and less on another under the account called “aircraft procurement.”

The problem: The flexibility goes only so far. Transfers among accounts are rare, and reprogramming doesn’t accomplish much in a budget account where the lion’s share of money is already spent on one thing.

Consider the Federal Mine Safety and Health Review Commission. Most of its costs are in the payroll of safety inspectors who go out to look at mines, Mr. Kogan says.

“You'll inspect fewer mines” under the sequester, he says. “That's all you can do.”

Similarly, Transportation Secretary Ray LaHood has predicted that airports will be affected by the need to reduce staffing for air-traffic control.

During a Friday press conference, Mr. Obama implied that agencies will make efforts to mitigate adverse impacts from the cuts on ordinary Americans.

Referring to likely staffing reductions for public schools on military bases, Mr. Obama said, “I expect that we’ll be able to manage around it.”

But he has warned that the cuts will have real effects, whether for military families or others.

“One can avoid the stupidest of these results,” says Mr. Kogan, referring to the sequester’s arbitrary mechanics. But he says there’s no way to implement the cuts this year just by having agencies spend less on paper clips and the like.

Another form of flexibility, says Steve Bell of the Bipartisan Policy Center, involves timing. In the process called apportionment, an agency might spend more in one quarter of the fiscal year, and cut back harder in another. With just seven months to go in the fiscal year, that flexibility, too, has limits.

Republicans in Congress weighed legislation that would have granted the Obama administration an enhanced degree of flexibility in making the budget cuts. But that move is controversial, in part because it could be viewed as Congress abdicating its constitutional duty to oversee federal finances. The Senate rejected that legislation Thursday.

Although the sequester's implentation kicks into gear on March 1, some cutbacks such as staff furloughs will take weeks or longer to put in place.

Bottom line: Unless and until some new fiscal plan is agreed upon, federal life will go on under the sequester. It’s not a total straitjacket for each agency, but it often doesn’t leave easy or numerous choices either.