Fear & Loathing in Washington, DC

The Executive Branch refuses to acknowledge that it has broad latitude on how to implement the Sequester. This may be good politics, but it is a disservice to our country. Gaming the system will not solve America’s fiscal problems or promote collaboration over combat.

[1] Gaming the system - Level 1
Under the Budget Control Act, the Federal Government can ignore the Sequester, for now.

The Sequester only happens if, at the end of a fiscal year, spending exceeds designated levels under the Budget Control Act. Therefore, the Sequester does not happen on March 1, 2013 but later, when it is necessary to, “eliminate a budget-year breach”. There are six months to cut spending and avoid the Sequester.

[2] Gaming the system - Level 2
There is no immediate “day of reckoning”.

The impact of the Sequester will not be felt until July for most jurisdictions and late August when schools start their next academic year. Federal funds for teachers, police, and many grant programs are sent to the states annually or quarterly. State governments then disburse these funds, matched with state and county contributions, to these services. States, counties, municipalities, and school districts start their fiscal year on this coming July 1, 2013 not last October 1, 2012.

[3] Gaming the system - Level 3
The “day reckoning” can be avoided using normal OMB methods.

Agencies spend their funds unevenly as contracts, travel, and personnel actions occur sporadically during the fiscal year. If everything was evenly paced, 25% would be left unspent on July 1 (to cover the final three months of a fiscal year - July, August, September). Unevenly paced spending can leave as much as 40% unspent in some agencies on July 1.

OMB provides budget guidance in June telling each agency how much they have left to spend. Agencies accelerate their fourth quarter spending to spend everything they have. If they don’t do this the excess money is returned to the Treasury, and the agency may have trouble justifying future spending increases. Imagine if remaining balances exceeding 25% were returned to the Treasury on July 1 – Sequester solved!

[4] Gaming the system - Level 4
A budget sweep could prevent Sequester now and for the next six years.

OMB could at any time conduct a budget sweep to reclaim unexpended civilian balances among revolving funds and contingency funds. That would bring $687 billion back to the Treasury for the current fiscal year. That is over half the entire ten year Sequester or 13 times more than the current fiscal year Sequester. Sequester solved!

[5] Gaming the system - Level 5
OMB could enforce its own guide lines and avoid the Sequester completely.

OMB uses a Current Services Analysis for modeling what it costs to maintain exactly the same level and scope of services in the next year’s budget. For decades agencies have been funded well above their CSA levels. The budget battles are always over how much to increase spending. They are never about cutting or even maintaining CSA levels. In the current CSA the Sequester actually creates a net $110 billion increase in federal spending over the next ten years. Enforce CSA levels and Sequester solved!

[6] Gaming the system - Level 6
Freezing federal hiring would meet all budget limits and end the Sequester!

By properly managing personnel actions the Budget Control Act targets could be reached in three years instead of ten with no furloughs. Currently there are over 4,900 vacancies among domestic agencies and our government still operates. There is currently another 1,358 civilian vacancies in the Department of Defense and we are safe. Salaries and benefits for just these vacancies total approximately $62 billion/year for domestic agencies and $17.4 billion/year for Defense. In a typical year an additional 29,000 positions become vacant government-wide. This means that over $350 billion in personnel costs could be avoided if hiring was frozen. Some positions may be deemed critical and necessary for filling, but the vast majority of federal vacancies serve Americans better by remaining vacant.

As each hour passes, politicians and pundits are ratcheting up their rhetoric. They need to stop pointing fingers and wringing hands. It is time to make real decisions based on facts.

It is time to be statesmen, not showmen.

Scot Faulkner is a former chief administrative officer for the U.S. House of Representatives. His articles on government reform appear at citizenoversight.blogspot.com

Debunking Doomsday

The drumbeats of doom are echoing across Washington, DC. Every day the apocalyptic vision of The Sequester looms larger as the clock ticks down to Midnight on February 28.

Conservatives are filling the air waves and the Internet with the horrors of how The Sequester will hollow out the Defense Department and leave America prostrate to a dangerous world. Liberals are countering with their own tales of teachers out of work, parks closed, and the social safety net torn asunder. Both sides are spewing out millions of emails detailing how The Sequester will end life as we know it and wreck America’s economy beyond repair. The media has likened The Sequester to releasing the Kraken and to an asteroid barreling towards the earth.

What is the truth behind these shrill warnings?

What is The Sequester?
In the summer of 2011, the Obama Administration, along with Democrats and Republicans in Congress, decided that the only way to break the strategic deadlock on the budget was to create The Sequester. It was the centerpiece of the Budget Control Act (BCA). It created highly prescribed cuts to the Federal Budget that were designed to be so horrific that no one would ever want them to occur.

How bad is it?
Very, very bad. The Sequester creates deep and detailed cuts to the front line services and operations of every Department and program. The cuts are intentionally designed to inflict immediate and catastrophic damage to the workings of the Executive Branch and to the American economy. This is detailed in http://citizenoversight.blogspot.com/2012/12/fiscal-flim-flam.html

So they created their own doomsday?
Yes. Strange as it may seem, America’s political leaders felt that the only way to stop political brinksmanship over the budget/debt/deficit was to create the ultimate brink. They hoped that the mutually assured destruction of everyone’s sacred cows (conservatives – Defense; liberals – domestic programs; Obama – his economic recovery) would create a spirit of compromise leading to a reasonable and balanced solution. Everything backfired.

What went wrong?
All sides in the budget/debt/deficit battle assumed a reasonable solution would only happen when the other side blinked. No one blinked. The Sequester, instead of avoiding brinksmanship, created a worse one. This is detailed in http://citizenoversight.blogspot.com/2012/12/madness.html

Can this be avoided?
Of course. Think of the iconic scene in “Blazing Saddles”. The new sheriff, when faced with angry townspeople ready to kill him, places his own gun against his head and takes himself hostage. In a low voice he screams, “Nobody move!”, while in a high voice he screams, “Help me!” He walks away from the mob and escapes to safety.

In the case of The Sequester, everyone is circling each other holding guns to their own heads. They are all threatening to shoot themselves and all are screaming for help. It is ridiculously surreal, made more so as everyone (including the media) is showing the public only the gun to the head, not the fuller picture of them doing it to themselves.

On January 1, 2013, the first Sequester deadline approached. Congress and the President simply delayed their self-imposed doomsday to the end February. They can vote to reset their own doomsday clock at any time or disable it completely.

So why don’t they?
Everyone still thinks someone else is going to blink. Democrats are “doubling down”, dismissing overspending while demanding more “investments”. The Democrats have become “debt deniers”. Former Speaker Pelosi denies there has ever been a spending problem. Senator Landrieu says spending is a fiction perpetuated by Fox News. Minority Leader Hoyer explains it is not about spending, but about paying for the spending.

Republicans are countering with warnings about America being disarmed and how the economic recovery (which they now admit may be happening) will vanish. GOP strategists are saying that they have Obama right where they want him – forced to make spending cuts to save his recovery. This is delusional. The Sequester will create so much documented pain so fast that the “debt deniers” will say, “See what happens when you cut spending. We can’t cut one dime without terrible consequences. So let’s move on to more spending and more taxes!”

Republicans are so self-involved they don’t realize they are in their own trap. This is detailed in http://citizenoversight.blogspot.com/2013/02/republican-opportunities-lost.html and http://citizenoversight.blogspot.com/2013/01/wasted-day-and-wasted-nights.html

Is there a way out?
Yes. Republicans can offer to revoke The Sequester in exchange for Obama conducting a “budget sweep”. This will immediately bring $687 billion in unexpended and unobligated funds back into the Treasury – nearly balancing the FY2013 budget. Republicans should also require a full scale review of $1.3 trillion in additional unexpended funds that reside in various accounts and reclaiming as much as is possible.

This allows everyone to declare immediate victory and eliminates The Sequester. With universal victory and The Sequester gone everyone can sober-up and consider real and lasting solutions to the budget/debt/deficit.

What are those real solutions?
The bi-partisan Simpson Bowles Report, issued on December 1, 2010, and countless other reports recommend entitlement reform as the only action that will really keep America from sailing over a real financial cliff. Such complex reform will take statesmanship instead of showmanship. It will also take time for politicians to move from combat to collaboration.

The way forward is for everyone to get used to working together by tackling less controversial matters. Think of a couch potato wanting to run the marathon. The first step is to walk a half mile and slowly build-up to running 26 miles. This newly minted athlete creates mini-milestones and celebrates them to maintain their momentum toward their larger goal.

For Democrats, they should cede to Republicans that there is at least a management problem with government that causes over spending. Republicans need to admit that this management problem exists every where, including the Defense Department. There are plenty of opportunities for mini-milestones amounting to over $650 billion a year in savings that can either be reallocated or applied to the deficit. There is something for everybody. These are detailed in http://citizenoversight.blogspot.com/2013/02/9528-opportinies-ignored.html

For Republicans, it is time to clean-up the Tax Code. Major reforms, like a Flat or Value Added Tax, are not in the cards, for now. Instead, go after the most heinous loopholes and ridiculous subsidies. Eradicating special interest tax breaks will generate upwards of $1 trillion in revenue over the next ten years without harming wage earners. In fact, Republicans could have been heroes by working on these all along, as tax legislation always starts in the House. This is detailed in http://citizenoversight.blogspot.com/2012/12/raising-revenue-responsibly.html

Is there any hope?
No. Politicians and the Media do not want to hear the truth or the solutions. The Sequester is too good a story. It helps further everyone’s myopic agendas, none of which are designed to help America or Americans. The media, both liberal and conservative, loves a countdown clock. The Sequester will generate more viewers and readers if things go poorly.

Therefore, it is time for concerned citizens to storm these citadels of cynicism with facts, before the clock strikes midnight.

NLRB's Homework Assignment

One of the reasons Washington, DC is so dysfunctional is that no one does their homework. The latest case in point, literally and figuratively, is Noel Canning v. National Labor Relations Board.

On January 25, 2013, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit unanimously ruled that President Barack Obama's three recess appointments to the National Labor Relations Board (NLRB) on January 4, 2012 were unconstitutional. These appointments raised eyebrows because: (1) they were made just one day after the expiration of Member Craig Becker's term. This left the five-seat Board with only two confirmed members - Mark Pearce and Brian Hayes. This meant the NLRB lacked a quorum to issue decisions; and (2) the circumstance that would allow a President to make “Recess Appointments” under Article II, Section 2 of the U.S. Constitution did not exist, because the Congress was in Pro Forma Session, not in a formal recess.

The case centered on Noel Canning challenging a February 8, 2012 NLRB decision on the grounds that its quorum only existed with the presence of invalid recess appointments. The D.C. Court of Appeals unanimously agreed.

There are many potential ripple effects from this decision, including some expansive language clarifying the Constitution’s “recess appointment” clause, dramatically limiting the circumstances when a President was empowered to act. This case is definitely bound for the U.S. Supreme Court with the potential of an historic ruling on the separation of powers between the Executive and Legislative Branches. [For more background on this issue read my earlier columns - http://citizenoversight.blogspot.com/2011/03/congressional-adjournments-unintended.html  and http://www.constitutingamerica.org/blog/blog/category/guest-constitutional-scholar-essayists/scot-faulkner/  ]

Overshadowing the broader Constitutional issues is the immediate issue of the continued operation of the NLRB in light of the ruling. The Court’s decision only invalidated the NLRB’s decision and stated the grounds. The Court did not issue any injunction against further NLRB activity.

Here is where everyone flunks their homework assignment. Today’s talk shows had every side tying themselves up in knots over whether it is legal to stop the NLRB’s activities, and if so, how. Some said cutting the pay of the NLRB Commissioners was one way to do it, but they did not know if had ever been done. Others said cutting pay was unconstitutional.

If only all these over paid talking heads, or their underpaid research staff, spent ten minutes on Google or simply knew someone who remembers the George Dunlop – Jamie Whitten fight of 1987. In 1987, Rep. Jamie L. Whitten, (D-MS) was chairman of the House Appropriations Committee. George Dunlop was Assistant Secretary for Environment and Natural Resources at the U.S. Department of Agriculture (USDA). Dunlop and Whitten had been antagonists since the days when Dunlop was Senator Jesse Helms' (R-NC) top agriculture staffer. Their battle came to a head in 1987 when Dunlop refused to attend one of Whitten’s hearings, opting to avoid another nasty and unproductive confrontation.

Whitten was not amused. The Chairman moved the FY 1988 USDA Appropriations bill through his subcommittee, the full Committee, and on to the House for consideration. It was soon discovered that FY1988 funding for Dunlop’s position had been omitted from the bill. Dunlop promptly met with Whitten, buried the hatchet, and funding for his position was added to the bill. Congress asserted its Constitutional power of the purse as a way of humbling a wayward Presidential appointee.

Thus, targeting positions through the Appropriations process is Constitutional. A little homework would have avoided all the “sturm und drang” on the talk shows. It also should serve as a guide for Republicans looking for ways to cut federal spending. There is nothing wrong with targeting specific programs, projects, positions, and offices to force the implementation of Inspector General and Government Accountability Office (GAO) recommendations. A much more rational way to deal with the debt instead of the meat axes unleashed through Sequestration.

Amazing where completing a homework assignment can lead.