White House holds back on sequester details
By Meghan McCarthy and Fawn Johnson
October 25, 2012
There’s a funny thing happening at federal agencies. When it comes to the details of the looming $1.2 trillion cut to their budgets, agency officials find themselves unable to explain just how those cuts would affect myriad programs on the ground. Instead, they have a unified message: talk to the Office of Management and Budget.
From the Agriculture Department to the Pentagon to the Social Security Administration, more than a dozen agencies have given National Journal the same stock response, redirecting reporters to OMB. (The exception was Justin Hamilton at the Education Department, who responded to a query with a link to Carly Simon’s “Anticipation.”)
Not that OMB, which has the task of making sure that President Obama’s vision is implemented throughout federal agencies, is willing to offer any more details. When asked why federal agencies have been told not to discuss sequester details, OMB press officers told NJ to review Deputy Director Jeffrey Zients’s July memo to agencies, telling them to continue normal spending. OMB also pointed to a 394-page report in September that estimates how much federal programs would have to be cut to meet the $1.2 trillion goal.
Obama’s own comments on the sequester offer insights on the administration’s motives for keeping a tight lid on the details of the potential cuts: The White House is hopeful Congress can reach an agreement during the postelection lame-duck session to head off the reductions. Obama said so himself at his third debate with Mitt Romney on Monday. In an interview with The Des Moines Register this week, Obama described the sequester as a “forcing mechanism” that could help motivate a polarized Congress to strike a broad deal on deficit reduction.
The lobbying community is getting the same nonanswers from agencies, even though they historically have better relationships with their individual agencies than OMB. Take the aviation community, which is obviously nervous because the Federal Aviation Administration could take a $1 billion hit. But the FAA is mum. “It’s a little scary because I don’t think the agencies know. Can the FAA wall off air-traffic control? It’s all up to OMB, and they never tell anybody anything,” said Jane Calderwood, vice president of federal affairs for the Airports Council International.
The National Air Traffic Controllers Association, whose members could be directly affected by sequestration, won’t talk to the media about its concerns. A written statement from NATCA spokeswoman Sarah Dunn said this: “NATCA is talking to members of Congress and others in the aviation industry about its concerns that the sequester could harm the efficient functioning of the U.S. aviation system.”
Lobbyists across a vast range of industries are in the dark about the details.
Julius Hobson, a lobbyist at Polsinelli Shughart who represents physician groups and long-term-care facilities, said he’s not surprised agencies have been mum ahead of the election—they want to avoid any information that could hurt Obama’s reelection bid. The sequester was mandated under the 2011 Budget Control Act, which was agreed to by both Democrats and Republicans. But if the administration were to detail where the budget knife would actually fall, Obama could end up getting stuck with a greater share of the blame for the cuts.
“I’d be surprised if we saw any kind of information about sequestration before Election Day,” Hobson said in an interview. “The only reason we have anything about sequestration now is because Republicans pushed through the Sequestration Transparency Act, and that forced OMB to put out the September report. That’s all we’ve got, and there’s not going to be anything else, at least not before the election.”
Hobson said that the flurry of letters sent by Republican members to federal health agencies like the Centers for Medicare and Medicaid Services and the Health and Human Services Department seeking details on health program cuts would also go unanswered.
The same is true in the defense world, where concerns over the potential impact of the $500 billion in extra reductions to Pentagon accounts have reached a feverish pitch. Sean O’Keefe, the CEO of EADS North America, a major defense contractor, told NJ in an interview this month he has not gotten any details from the Pentagon on sequestration.
“I’ve had plenty of discussions over there. I’ve met with several members of the leadership in the Pentagon over the course of the last several months. I’ve been honored to be invited by Secretary [Leon] Panetta himself to engage in industry debates about this question,” O’Keefe said. “I have not had any discussion with anyone about any individual program and how it would be affected by it.”
Contrast this to the furor that the FAA and the aviation community drummed up last year when Congress was on the brink of partially shuttering the agency. The FAA told anyone who would listen that $2.5 billion in contracting money would be held hostage by a partial FAA shutdown and 4,000 employees would be furloughed. The agency provided detailed lists of the projects and offices that would be most affected by the shutdown. Transportation Secretary Ray LaHood took over a White House press conference to beg Congress not to let it happen.
There is a big difference between then and now. One could argue that the DOT tactics didn’t work the last time around. Congress let the FAA close anyway, almost egged on by the administration’s outrage, and it cost the Treasury millions in uncollected airline tax fees.
Now the only thing that has been made public is the OMB’s analysis. While those numbers are a starting place, they don’t give a full picture of how the cuts will work on the ground. For example, $2.5 billion would come from the National Institutes of Health. But that doesn’t give any indication of which research projects, grant programs, and labs will be cut, or by how much. On top of this, agencies and OMB can shuffle around the cuts to hit programs they think are inefficient and protect those with Obama administration approval.
With the cuts coming in just over two months, shouldn’t the agency be getting ready? Yes, say federal budget experts, but there are plenty of political reasons not to spill exactly how the cuts would work.
“Folks in the administration very much want the sequester to be averted,” said Douglas Holtz-Eakin, former head of the Congressional Budget Office, in an interview. “Then you should try to ensure for as long as possible that everything is at risk.”
In other words, giving specific details on what gets cut means lobbying groups and advocates representing programs that are lucky enough to avoid the sequester’s ax could stop pressuring members and the White House to turn off the automatic cut.
“When you have details, that also tells you what’s not going to get cut … if you try to have maximum pressure to get the sequester undone, that doesn’t help,” Holtz-Eakin said.
In addition to keeping the pressure on, having the Obama administration pick which programs it is most willing to cut risks handing Republican budget hawks some future targets. You can hear the talking points: If you were willing to give this up first under the sequester, why not do it now?
Should Congress fail to head off the sequester, final decisions on the cuts would be made between OMB and congressional appropriators, says Dan Mendelson, an associate director for health at OMB during the Clinton administration.
“Ultimately it will be like a mini-negotiated round of appropriations with the Congress,” Mendelson said in an interview. "And if you want to do some big deficit-reduction bill down the road, you have to make sure you aren’t angering the very people you need as allies.”
This is precisely the tactic that the American Association of Port Authorities is taking as terminal operators look at the variety of cuts to port-security programs that they could face under sequestration. AAPA President Kurt Nagle said he is spending most of his lobbying energy on Capitol Hill because he knows it is lawmakers who must act to avert the automatic cuts. “They obviously are going to need to come up with a deal that still cuts the budget, probably even more so in that scenario,” he said. “We continue to talk to the leadership in both the House and the Senate, and certainly in terms of importance of our programs.”
That sounds a lot like an appropriations negotiation: Don’t cut us, we’re too important.
Here’s another excuse for the “I don’t know” response. What gets cut will ultimately rely on the election. Here’s one example from Mendelson: If President Obama gets a second term, some health programs could be more likely to get cut, because 30 million uninsured people are expected to get insurance coverage. If Mitt Romney wins, in theory, fewer health programs would suffer cuts because he would try to repeal the health care law.
Sara Sorcher and Amy Harder contributed to this report.
By Meghan McCarthy and Fawn Johnson
October 25, 2012