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A Project of The Annenberg Public Policy Center

Sequester Spin

The Sunday talk shows included exaggerated claims from both sides about the debate over automatic spending cuts scheduled to take effect March 1:

  • Education Secretary Arne Duncan said “as many as 40,000 teachers could lose their jobs.” But that assumes the entire $2.8 billion in looming DOE cuts would come from teacher salaries. Duncan himself testified there would be cuts elsewhere — including cutting “more than 70,000 students from grant and work study programs” and furloughing department workers.
  • Sen. Tom Coburn claimed federal spending has doubled in 11 years, but he doesn’t account for inflation. In inflation-adjusted dollars, government spending has risen from about $2.4 trillion in 2001 to $3.5 trillion in 2012 — an increase of $1.1 trillion, or nearly 50 percent.

Barring a last-minute deal, the automatic spending cuts mandated by the Budget Control Act are scheduled to take effect March 1. Under the law, the Office of Management and Budget will direct all federal departments to cut spending across the board this fiscal year by $85 billion and overall by nearly $1 trillion over 10 years. The cuts would be equally divided among domestic and defense programs.

In Washington’s budget parlance, this is known as sequestration.

40,000 Teachers at Risk?

Duncan, President Obama’s education secretary, and Coburn, a Republican senator from Oklahoma, were among the political figures debating the potential impact of the cuts on the Feb. 24 talk shows.

On “Face the Nation,” Duncan warned about the impact on the nation’s education system, while on “Fox News Sunday,” Coburn stressed the need to reduce federal spending.

We’ll first look at Duncan’s claim, which is emblematic of the White House’s dire warnings about the looming budget cuts.

Duncan, Feb. 24: It just means a lot more children will not get the kinds of services and opportunities they need and as many as 40,000 teachers could lose their jobs.

Duncan has warned about the potential for layoffs on multiple occasions, including in his Feb. 14 testimony before the Senate Appropriations Committee. Typically he gives two examples that add up to 17,200 teachers, aides and staffers (not all of them teachers). In his Senate testimony, for example, he said cutting Title I places at risk “approximately 10,000 teachers and aides” who teach disadvantaged students and cutting Part B of the Individuals with Disabilities Education Act could force states and districts to “cover the cost of approximately 7,200 teachers, aides, and other staff.”

We asked the department to provide us with support for Duncan’s layoff estimate of “as many as 40,000 teachers.” We were told that the department arrived at the 40,000 figure by doing a simple “back of the envelope” calculation. It divided the entire amount of the department’s cuts ($2.8 billion) by the cost of a teacher’s salary and benefits ($70,000).

We also were told that Duncan wasn’t talking about only teachers, but rather school teachers, aides and staffers. The department’s layoff figure, we were told, was conservative because aides and staffers in most cases cost less than teachers. (The department arrived at $70,000 by assuming a salary of $54,000, plus $16,000 in benefits.)

But the department’s crude mathematical equation ignores the fact that sequestration would impose across-the-board cuts that affect programs that don’t help to fund teachers.

In fact, Duncan has warned about other cuts that the department may have to make in order to reduce its budget by $2.8 billion this fiscal year. In his Feb. 14 testimony, he said:

  • “We would also cut more than 70,000 students from grant and work study programs that help needy students finance the cost of college.” (See the 23:18 minute mark of his testimony on C-Span.)
  • “Cutting mandatory administrative funds for Student Aid programs will affect the servicing of student loans by Not-For-Profit (NFP) contract servicers. Sequestration could require each NFP servicer payment to be reduced. The impact of reducing payments to the NFP student loan servicers would be significant and could adversely impact as many as 29 million student loan borrowers.”
  • “The Department’s ability to collect defaulted student debt and provide high-quality services to borrowers once they are out of school would likely be hampered by sequestration, due to possible cuts in contracts with private-sector entities.”
  • “The sequester also would likely require the Department to furlough many of its own employees for multiple days.”

We should point out, too, that the bulk of teacher layoffs, if they occur, will be decided by the school districts (not the federal government) and happen in the 2013-14 school year (not the current one). Duncan told the Senate committee that “local districts will be making decisions in April and May of this year about which jobs to cut and which teacher contracts to renew.” That gives Congress a little more time to work out a deal, if the March 1 deadline passes without any legislation to avert the automatic cuts.

The one notable exception is a program that provides funding to districts with a disproportionate share of students from military families or those living on Indian lands. A cut of $60 million to that program, known as Impact Aid, would take effect March 1, Duncan told the senators. By the department’s math, that would be the equivalent of 857 teachers — assuming that the school districts do not try to offset the cuts by reducing other accounts, such as building maintenance.

Federal Budget ‘Twice the Size’?

Coburn made his remarks about the size of the budget on “Fox News Sunday,” while discussing the impact of the automatic budget cuts. He has made this claim on other occasions, however, including during a floor speech last year.

Coburn, Feb, 24, 2013: Look, the federal government is twice the size it was 11 years ago. … And what sequestration is, it’s a terrible way to cut spending. I don’t disagree with that. But to not cut 2.5 percent out of the total budget over a year when it’s twice the size it was 10 years ago? Give me a break.

Coburn, May 15, 2012: What most people don’t realize is the federal government is now twice the size it was in 2001. Think about that. We’re spending twice as much money as we did in 2001.

Federal spending has increased and, without adjusting for inflation, it has nearly doubled since 2001 — rising from nearly $1.9 trillion (Table 1-2) in 2001 to $3.5 trillion in 2012 (Summary Table 1), according to the nonpartisan Congressional Budget Office’s reports. But any standard measure of spending trends must account for inflation — as the conservative Heritage Foundation did in an October 2012 report on the federal budget.

A chart in the Heritage Foundation traced the growth of the federal budget from fiscal 1992 through fiscal 2012 in inflation-adjusted dollars. That chart showed federal spending increased from $2.367 trillion in 2001 to $3.563 trillion in 2012 – a rise of nearly 51 percent. The 2012 spending figure in the Heritage chart was a projection, based on the CBO’s August 2012 budget and economic outlook report. The actual amount was slightly less — $3.538 trillion, according to the CBO’s latest report — reducing the growth of the federal budget to about 49 percent over 11 years in inflation-adjusted dollars.

Neither Heritage nor Coburn takes into account the population increase, which also affects federal spending. The U.S. Census Bureau estimated the population at 313.9 million in July 2012, up 29.1 million or 10 percent from 284.8 million people in July 2001.

Another way to measure federal spending is as a percentage of the nation’s economy. Federal spending was 22.8 percent of the gross domestic product in 2012 and 18.4 percent of GDP in 2001, according to the CBO reports. Spending is up, but still not double.

We don’t mean to minimize the financial problems facing the federal government or the impact of the looming automatic budget cuts, which the Bipartisan Policy Center called “akin to a slow motion train wreck.” But Coburn and Duncan could have made their points without resorting to exaggeration.

— Eugene Kiely