CA Senate report distorts sequester cuts

ScissorsMarch 15, 2013

By Katy Grimes

Sequestration is the word of the month. Prior to the federal government threatening Draconian cuts to food assistance programs and the Head Start program, most people had never heard of the word, which refers to the automatic cuts to federal spending that began on March 1.

Together with much of the media, the Obama administration’s sequestration warnings have been dire. “Devastating automatic cuts are taking effect if Congress doesn’t act, slashing vital services for children, seniors, the mentally ill, and our men and women in uniform,” the White House warned.

Actually, these sequestration cuts are merely cuts in increased government spending, not real budget cuts. According to a new report from the California Senate Office of Research, there are a number of programs exempted from sequester cuts, including:

* Child nutrition (school lunch program)
* Federal-aid highway programs
* Medicaid (Medi-Cal)
* Children’s Health Insurance Program (Healthy Families)
* Military salaries
* Pell grants
* Social Security benefits
* Supplemental Nutrition Assistance Program (CalFresh, formerly known as food stamps)
* Supplemental Security Income
* Temporary Assistance for Needy Families (CalWORKs)
* Veterans’ benefits and health care

Senate Office of Research

And nowhere in the Senate report does it address what the “cuts” really are — cuts of $44 billion in federal spending growth. Federal spending still will go up 1.4 percent next year, instead of 1.6 percent without sequestration. So there really is no overall cut.

“Many of the spending cuts Obama is calling for are actually revenue increases, like the $140 billion in ‘reduced payments to drug companies,’ which actually means the drug companies will be paying back rebates to the government,” the National Center for Policy Analysis found. “The plan includes similar savings in unemployment insurance and postal service reforms but a large portion of these savings comes from new fees.”

California warnings

The California state Senate report did not affirmatively define what will be cut. Instead, the Senate office reported lots of “coulds”:

“California receives large amounts of funding from the federal government: approximately $86 billion in federal funds will be funneled through the state budget in 2012-13. Even more federal funds flow directly to localities and entities outside of the state budget, such as Medicare payments to providers, and Head Start payments to locally based organizations.

“As a result of the sequester, California could lose several hundreds of millions of federal dollars in federal fiscal year 2013 alone.

“And according to the U.S. Department of Education, K-12 schools in California could lose more than $200 million in federal funds.

“The federal sequestration, along with two other federal fiscal issues—the budget and the debt ceiling—could have significant impacts on California’s budget and economy.”

And as Michael Tanner wrote in National Review Online, “Perhaps more significantly, much of what the president calls spending cuts are actually new revenues in disguise.”

Moreover, the Senate report simply assumes that all these programs are needed and work well. But to cite just one example, numerous studies have shown that Head Start is a wasteful program that does nothing to help children do better academically or otherwise later in life.

So it remains unclear exactly how California will be affected by the sequestration “cuts.”

The problem may be that the Senate Office of Research is completely controlled by Senate President Pro Tem Darrell Steinberg, D-Sacramento. The office is not as objective as its equivalent in the U.S. Congress, the bipartisan Congressional Budget Office. So the data it produces isn’t as good.

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