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A Project of The Annenberg Public Policy Center

Underselling the Sequester Cuts

An ad from a fiscally conservative group makes a true but misleading claim that the sequester only amounts to “a 3 percent cut in federal spending.” A majority of federal spending is exempt from the sequester cuts, so the parts that are not will be cut much more deeply than that. For example, defense spending (other than for military personnel) will be cut by 8 percent across the board, and nondefense discretionary spending will be cut by between 5 percent and 6 percent.

President Obama has warned that with sequester cuts “people are going to be hurt,” jobs will be lost and government services will be seriously hampered. Republicans have accused the president of over-hyping the impact, and we have written about the ways in which some Democrats have exaggerated the impact.

The fiscally conservative group Public Notice takes the opposite approach, downplaying the effects of the sequester. Its ad features video of pennies dropping into a jar to bring home the point that the sequester amounts to just “three cents out of every dollar the government spends.”

According to Roll Call, the ad is part of a “six-figure cable TV and online ad campaign” from Public Notice, a group that is headed by a former aide to President George W. Bush.

Announcer: President Obama called sequestration “a meat cleaver’” that will “eviscerate government services.” What is sequestration? A 3 percent cut in federal spending. Three cents out of every dollar the government spends. We’re more than $16 trillion in debt and the government wastes billions each year on duplicate programs. Americans have made tough choices and cut back. Washington refuses. Call Washington. Ask them why it’s so hard to cut spending.

Similar comments have been made by Republican leaders, including Sen. Orrin Hatch and Senate Republican Leader Mitch McConnell.

Hatch, Feb. 27: No one likes how the sequester is structured, but let’s get real here: what we’re talking about is cutting 2 to 3 percent of our federal budget at a time when we’re $16.6 trillion in debt.

McConnell, Feb. 26: Look, the choice we face isn’t between the sequester and tax hikes. Remember, we are only talking about cutting 2 to 3 percent of the budget. Any business owner or middle-class parent will tell you it is completely ridiculous to think Washington can’t find a better way to cut 2 or 3 percent of the Federal budget at a time when we are $16 trillion in debt.

The sequester was part of a negotiated compromise to raise the debt ceiling in 2011. Included in the Budget Control Act of 2011, its intent was to act as a poison pill to encourage deeply divided lawmakers to forge a compromise that would result in savings of $1.5 trillion over 10 years. That compromise never came to pass, and the sequester was ultimately activated March 1.

The sequester would reduce federal spending in the 2013 fiscal year by $85 billion (and by a total of $1.2 trillion over 10 years). The federal government will spend about $3.55 trillion this year, so $85 billion amounts to about 2.4 percent of all federal spending.

But that’s misleading, because large parts of the federal budget are exempt from the sequester cuts — including such “mandatory” programs as Medicaid, Social Security, welfare and food stamps. The sequester cuts are split between defense and nondefense spending. They include cuts to discretionary defense spending (such as weapons purchases and base operations, but not military personnel) and to both discretionary and nondiscretionary domestic programs (everything from airport security to education aid to research grants). Cuts to those programs will be much deeper than 2.3 percent. For a full accounting of the programs subject to, and exempt from, sequestration cuts, see the White House’s September report on sequestration transparency.

According to a February report from the nonpartisan Congressional Budget Office, the sequester includes $42.7 billion in cuts to discretionary defense spending, a 7.9 percent reduction; $28.7 billion in nondefense discretionary cuts, a 5.3 percent reduction; $9.9 billion in Medicare cuts, a 2 percent reduction; and $4 billion in other mandatory cuts, a 5.8 percent reduction. (See Table 1-2 on page 14.)

Claims that the sequester only cuts 2.4 percent (or 3 percent) of the federal budget ignore that the sequester does not apply to the entirety of the federal budget. Rather, it mostly targets discretionary defense spending and domestic spending. Those programs will see budget reductions more than two to three times higher than the amount claimed by the Public Notice ad and some Republicans.

— Robert Farley