In terms of cutting government spending, the Budget Control Act’s spending caps and sequestration have been an unparalleled success story in recent years. And yet, the House of Representatives voted last Thursday to weaken the caps in 2014 and 2015 for a $63 billion increase in the discretionary budget.
Sequestration has been an effective tool to do what Congress for too long failed to do—cut spending. Federal spending has fallen for two straight years for the first time since the end of the Korean War—a remarkable feat with Democratic control over the White House and Senate. As The Wall Street Journal put it, “A testament to the success of the [sequestration] caps is that nearly every Democrat and spending lobby in Washington is desperate to get rid of them.”
Concerns that sequestration would decimate vital government functions were largely exaggerated. After the President sounded the alarm over the supposed budget “meat cleaver” earlier this year, The Washington Post reported that the vast majority of the President’s doomsday predictions never came to pass. Federal agencies (with the help of Congress) were for the most part able to cope with the $85 billion in cuts by prioritizing their budgets.
Worries that sequestration would hurt the economy were also overblown. As Moody’s remarked, the U.S. economy “has demonstrated a degree of resilience to major reductions in the growth of government spending.” Moreover, research shows that reductions in government spending free resources in the economy for investment and job creation, thus spurring economic growth in the long-run.
Although the across-the-board nature of sequestration has its flaws, it would be a mistake to eliminate this spending restraint in exchange for more spending and revenue and hollow promises of future restraint.
The indiscriminate cuts fall disproportionately on defense spending compared to other discretionary programs. Lawmakers could better prioritize spending within the budget caps to protect core constitutional functions such as defense. Additionally, sequestration reduces projected spending by a mere 2.5 percent over the decade it is in effect.
Its biggest shortcoming, however, is that it is the wrong instrument to reduce the growth in entitlement programs—the main drivers of growing deficits and debt. Reforming Medicare, Social Security, and health-related spending such as Medicaid—which account for 45 percent of government spending—will be critical in devising any fiscally responsible budget in the future.
Despite its imperfections, sequestration works. It has been the one policy out of Washington that has cut spending. The recent Ryan–Murray budget does Americans a disservice by weakening the sequestration spending caps in exchange for spending and revenue increases today and mostly promises of savings in a distant future that may never materialize. The deal also takes pressure off Congress to push for more important entitlement reforms. If Congress is serious about reducing spending and debt, keeping sequestration in place is the better option for now.
Michael Sargent is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.