Absent a last-minute Congressional deal, sequestration cuts to the budget begin to take effect on Friday. The automatic, across-the-board cuts to discretionary spending are the result of the 2011 deal to lift the debt ceiling. If left in place for the next ten years, sequestration would trim $1.2 Trillion from the government’s $40-50 Trillion spending plans over the next decade.
When the sequester takes effect, the media is reporting that the government will have to cut $85 Billion from spending between March 1st and the end of the fiscal year, September 30th. The Obama Administration is spinning a Dickensian nightmare if the cuts come into effect. Apparently, according to Obama and the media, cutting $85 Billion from a $3.6 Trillion budget puts in jeopardy the government’s ability to prosecute criminals, patrol the border, and inspect food. This laughable claim is even more ridiculous when one realizes that the actual cuts are around half the $85 Billion reported by the media.
The $85 Billion in cuts, which itself is just over 2% of the federal budget, is from budget authority. This is the amount Congress authorizes an agency to spend under specific programs. It allows an agency the legal authority to enter into contracts or plan spending, a great deal of which may come in subsequent years. Budget outlays, by contrast, are monies the government will actually spend during the fiscal year. According to the CBO, the sequester will force the government to cut around $40 Billion in outlays between Friday and September 30th.
Think of it this way. You have a credit card with a $10,000 limit. You currently have a $5,000 balance on the card. On Friday, the credit card company cancels your card and demands immediate payment. You adjust your budget to pay off the $5,000 balance. To the media, however, the credit card company has just cut your budget by $10,000, since that was the amount you had been authorized to spend.
So, on Friday, the government has to trim around $40 billion over the next seven months. This represents just over 1% of total federal spending. Unfortunately, the bias against cutting federal spending is such that the media can’t even be honest about that.