Should Sequestration Be Eliminated for FY2020 and FY2021? (H.R. 2110)

What is H.R. 2110?

(Updated September 9, 2019)

This bill — the Relief From Sequestration Act of 2019 — would eliminate sequestration for FY 2020 and FY 2021. Sequestration refers to budget caps which, if they aren’t waived by Congress, would cause spending cuts of $125 billion per year from current appropriations levels.

Argument in favor

The cuts imposed by the sequestration budget have harmed the U.S. economy, government, and country overall. Ending sequestration for the next two fiscal years will help facilitate increased federal spending on defense and non-defense priorities alike.

Argument opposed

Sequestration isn’t necessarily all bad, as it forces cuts to low-value programs across the federal budget. Rather than throwing sequestration out altogether, it’d be more valuable to proactively plan ahead in budgeting to ensure sequestration isn’t triggered.

Impact

Federal budget; Congress; and sequestration.

Cost of H.R. 2110

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Rep. Adam Smith (D-WA), Chairman of the House Armed Services Committee, reintroduced this bill from the 115th Congress to end sequestration and its damage to the U.S. economy:

“I am reintroducing the Relief from Sequestration Act of 2019 to repeal the automatic cuts in both discretionary and mandatory spending triggered by the 2011 Budget Control Act’s sequestration. These cuts have impacted our economy, affected our government, and harmed our nation. At the same time, this bill does not deny the fact that we need a comprehensive, long-term deficit reduction deal. We do. We have a deficit problem that must be addressed and a broader revenue and spending plan is fundamental if we are to tackle the debt and deficit. Rather, the Relief from Sequestration Act recognizes that critical national priorities and the economy should no longer be held hostage by the threat of sequestration while Congress debates a comprehensive budget fix. The Budget Control Act’s automatic and indiscriminate cuts are not a long-term solution. They will only damage our economy and undermine national security in the process. Because Congress recognizes the harm that broad and indiscriminate cuts inflict on our economy, government programs, and the military, it has previously delayed the Budget Control Act’s $1.2 trillion in cuts from fully taking effect. As sequestration has proven, haphazard cuts are not effective in reducing the debt. Any sustainable fiscal plan should include a thoughtful budgeting approach that incorporates targeted reductions and increases in revenue.”

House Armed Services Committee Ranking Member Rep. Mac Thornberry (R-TX) has expressed his support for ending sequestration for a number of years. Most recently, in 2017, Rep. Thornberry argued that sequestration needs to be ended in order to increase defense spending to protect U.S. readiness. Rep. Thornberry’s belief that sequestration harms defense is long-held. In 2012, he wrote in Politico that:

“Spending reductions will also have economic consequences. We should not spend money on defense in order to create jobs. But we should also be aware of the effects on jobs of such significant cuts. Studies have found that sequestration would result in 1 million to 2 million job losses, cutting our nation’s gross domestic product by about 1 percent. Those economic consequences are already kicking in. Companies doing business with the Defense Department must plan ahead for cuts. In fact, the law requires many employees to send out notices of potential layoffs — and those notices will hit the mailboxes just before the November election. The House acted earlier this year to prevent sequestration by substituting other spending reductions for the defense cuts. But time is short. Even if Congress acts to stop sequestration late this year, before it takes effect in January 2013, it may be too late for many jobholders. The damage to our economy and to our defense industrial base will have been done. We have widespread agreement in this country that our mounting debt threatens our future. We do have to examine every dollar of federal spending to ensure that it is spent effectively and efficiently — including the defense budget. But defense budgets are already going down (as opposed to entitlements, the biggest category of federal spending ). And no manager can make rational decisions with the arbitrary reductions of sequestration. Even during a political campaign — we have to find a way to put the country’s security first.”

In a 2017 blog post, The Concord Coalition argued that sequestration is a bad way to make budget cuts:

“To reduce budget deficits, policymakers must make politically painful policy changes by raising taxes on constituents and/or reducing spending on services provided to them. Because different tax increases or spending cuts of the same magnitude do not always have the same impact, policymakers should aim to make informed decisions that target these policy changes rationally. Making policy this way, however, requires difficult trade-offs and decisions about who will bear the burden. Many politicians seek to avoid the responsibility (and negative political ramifications) of these trade-offs. A common method of doing so is sequestration. Under sequestration, instead of making specific spending cuts to individual programs, policymakers pass the buck to executive branch agencies by requiring them to reduce spending across the board by a certain percentage. These indiscriminate cuts impact wasteful and effective public programs alike. This inhibits the ability of lawmakers and agency leaders to plan wisely and for the long-term. When sequestration has been implemented, it has generally been the result of a budgetary trigger that was never intended to go into effect. The most recent example of this is the 2011 Budget Control Act… Both because of its indiscriminate nature and because it is aimed at the wrong parts of the federal budget, sequestration is a bad way to make budget cuts. Politicians should instead do the job they were elected to do and make the tough choices necessary to put the budget on a sustainable trajectory.”

In a 2013 Slate article, Matthew Yglesias argued that sequestration isn’t necessarily all bad:

“A lot of liberals I read are very hot to trot with the idea that Congress should just repeal sequestration tout court. That’s definitely correct as a matter of basic Keynesian countercyclical stabilization policy and obviously it makes for a nice convergence point for people who want to keep the fiscal stimulus agenda in the discourse. But on the merits it seems to me that while sequestration is hardly optimal budget policy, it really isn’t all that bad in the scheme of things, and really going through with it would be better than repealing it. The key reason is that fully half the cuts are cuts to ‘defense’ spending, and yet nobody from either party is seriously trying to maintain that America will be left defenseless in the wake of this reduced military spending. The specific sequestration mechanism is clearly awkward and clumsy, but again nobody’s saying the Mexican army is going to come swarming over the border to reconquer Santa Fe, that the Taliban is now going to be able to outspend the Pentagon, or that America’s NATO allies are now left unable to fend off a Russian invasion. That’s half the cuts with basically zero real public policy harm. So then you look at the domestic side. Your basic transfer payments to poor people are spared, your transfer payments to the elderly are basically spared, and then everything else gets cut willy-nilly. That leads to some real policy harms. Valuable research grants are going to not happen. We’ll see some real bottlenecks at regulatory agencies. But obviously there’s some waste and fat in this domestic discretionary spending. Long story short, if you’re a defense dove like me and have a nonutopian view of the domestic discretionary budget, then this looks like we’re mostly talking about harmless spending cuts. It is very true that the current moment is not an optimal time to cut wasteful government spending. Given the high unemployment rate, the low and stable inflation rate, the low cost of federal borrowing, and the weird dynamics of ‘Evans Rule’ monetary policy, I would say that 2013 is an excellent time for the federal government to waste some money on make-work military contracting gigs. But in the grand scheme of things, wasting resources on low-value programs is not a great idea, and there’s more to life than timing. Sequestration, long story short, is not a great idea, and there are a lot of alternatives that I would deem superior, but it very much seems to me that doing it would be better policy than straightforwardly undoing it.”

This bill has eight Democratic cosponsors in the 116th Congress. Last Congress, it had five Democratic cosponsors and didn’t see committee action.

Of Note: The Budget Control Act introduced sequestration in 2011. Under sequestration, automatic, indiscriminate cuts were to be applied through FY 2021. These cuts were designed to decimate discretionary spending, and were intended to force Congress to enact a long-term deficit reduction plan; they weren’t ever meant to take effect.

Unfortunately, when Congress failed to agree on a solution to reduce the U.S. deficit, sequestration took effect for FY 2013. Since 2013, Congress has continuously delayed sequestration cuts by passing various bipartisan budget agreements, but the mere threat of sequestration has had unacceptable and serious economic implications disrupting regular order in Congress.

Media:

• Sponsoring Rep. Adam Smith (D-WA) Press Release
  
• Sponsoring Rep. Adam Smith (D-WA) Dear Colleague Letter
  
• The Concord Coalition Blog (In Favor)
  
• Slate (Opposed)
  
• Investopedia - Budget Control Act (Context)