A Sequester Primer: Defense, Transportation And The Economy
A Sequester Primer: Defense, Transportation And The Economy
Weekend Edition guest host Don Gonyea talks with a team of NPR correspondents about the federal spending cuts that will take effect March 1 unless lawmakers reach agreement on deficit reduction. Correspondents Tom Bowman, Julie Rovner and Brian Naylor look at possible cuts in defense, health and transportation spending. Correspondent John Ydstie looks at the potential economic impact of the spending cuts.
DON GONYEA, HOST:
This is WEEKEND EDITION from NPR News. I'm Don Gonyea, in for Scott Simon. Here in Washington, they call it sequestration. It's a big word for big budget cuts to nearly every federal agency. Those cuts are due to take effect next Friday, March 1st. That is unless the president and Congress can come up with some sort of budget compromise. But the window for making a deal is closing. We're going to take a closer look at what these cuts would mean for some government agencies and for people around the country. We've brought together a team of NPR correspondents. First, NPR's Tom Bowman is here to talk about one of the biggest parts of the budget - that's the Department of Defense. Hi, Tom.
TOM BOWMAN, BYLINE: Hey, Don.
GONYEA: So, top brass in the Pentagon, some members of Congress, have said these cuts will make us less safe. What would actually happen if the cuts go into effect?
BOWMAN: Well, actually, Don, we're actually seeing some impact. The Navy decided not to send a second carrier to the Persian Gulf, the USS Truman. That's something they've been doing for years to keep an eye on this region. And some Army units already have postponed training, like gunnery practice for tank units. But the problem's going to be less for national security. The country's not going to be less safe starting March 1st. It's really going to be more of an economic impact, I think. Some contracts may have to be canceled. And the big thing could come at the end of April if the furloughs go into effect. You're talking 800,000 Pentagon civilian employees being furloughed one day a week for the rest of the year. But the generals and the admirals keep pushing this issue of America would be less safe. The Army says, you know, a lot of the Army units won't be trained at the right level, at the highest level. Air Force units are the same as well. They won't be, you know, right at this level. And Defense Secretary Leon Panetta said, listen, if this goes on for a long time, for years, America will be a second-rate military power.
GONYEA: So, the dire predictions, immediately nothing, but.
BOWMAN: Exactly. How long will this go into effect? That's the big concern. If it goes in for the rest of the year, let's say, or into next year, these cuts could have a pretty, you know, significant impact on readiness levels. That's the big concern.
GONYEA: OK. On the domestic side of things, we've got a couple of our experts. NPR's Julie Rovner and Brian Naylor. Hi, guys.
JULIE ROVNER, BYLINE: Hey.
BRIAN NAYLOR, BYLINE: Hi, Don.
GONYEA: Julie first. You cover healthcare and health policy. How would these cuts affect government spending on health?
ROVNER: You know, it's kind of ironic that the two big programs that everyone says are the biggest drivers of federal debt, Medicare and Medicaid, would barely be affected at all. Medicaid, because it serves the poorest of the poor, was declared exempt from the cuts when the legislation was agreed to. That was demanded by Democrats and President Obama. Medicare, the program from the elderly and those with disabilities, is subject to some cuts, but only to health care providers - doctors and hospitals and insurance companies. And those cuts are limited to 2 percent. Every other health program, however, things like the National Institutes of Health, the Centers for Disease Control and Prevention, the parts of the public health service that deliver direct patient care, like community health centers, they would be subject to cuts in something of the neighborhood of about 9 percent, according to estimates. The result would be, in the case of community health centers, for example, something like 900,000 patients wouldn't be able to get care between now and the end of the fiscal year.
GONYEA: Julie, stay right there. Brian, you've been covering transportation. Would these cuts really affect agencies like the FAA or the Department of Transportation?
NAYLOR: Yes, they will. They're talking about furloughs under the sequestration. There's not a lot of flexibility, so they basically have to cut everything. And, I mean, the Department of Transportation, they're talking about a billion dollar cut, and that's going to be mean furloughs for some 47,000 FAA employees. And that includes about 14,000 air traffic controllers, all of whom will have to be essentially laid off for one or maybe two days a pay period, which means that's they're not going to be able to staff the air traffic control towers. They're not going to be able to staff the regional radar centers. Transportation Secretary LaHood yesterday at the White House says this means that we're going to be facing delays, especially in the height of the summer travel season because there will be fewer controllers. So, it means - this is one area, I think, where people, especially air travelers, are actually going to feel the effects of this.
GONYEA: Brian and Julie both, if they do take effect, how quickly do we start to feel these sorts of things you're talking about?
NAYLOR: It won't be right away in terms of the FAA because it's - when they start implementing the furloughs, they first have to go through the process of talking and informing their employees and the public employee union. So, it probably won't really start until the first of April.
ROVNER: Same thing in health care. It might take a while for these cuts to trickle through the system.
GONYEA: NPR's John Ydstie is also with us. John, you've been speaking with analysts about how these cuts might affect the economy more broadly. So, Americans across the country, people who don't work for the government, who aren't directly connected like this, how should they view things? Will these cuts make any kind of an immediate difference in their lives?
JOHN YDSTIE, BYLINE: Well, as Julie and Brian say, the effects aren't likely to be immediate because the government managers have discretion on timing. They won't occur in the first day or the first week or the first month, but if the president and Congress can't find some alternative agreement, they will take affect and people will feel the effects in terms of these reductions in services and efficiencies in government services. So, delays in travel at the airport, as Brian says, USDA inspection could be frayed as inspectors are furloughed, 70,000 kids could not get Head Start if the sequester continues.
GONYEA: And would the sequester affect economic growth and jobs growth?
YDSTIE: The Congressional Budget Office says we could see the loss of about half a percentage point of GDP for this year and 750,000 fewer jobs. But it's not likely to push the economy into recession. The size of the cuts - $85 billion a year - is only about a half of 1 percent of the U.S. economy. So, not big enough to have a big effect there.
GONYEA: And ultimately, the reason we have these cuts is because of an attempt to reduce the country's deficit spending and ultimately our debt. How urgent does that situation feel now?
YDSTIE: Well, Don, it's not urgent that we start cutting government spending on March 1st. Congress and the president have already agreed to two and a half trillion dollars in cuts over the next 10 years. What is urgent, though, is that the Congress and president regain the trust of the American people and the financial markets; that they can get control of the debt and make the necessary adjustments to Medicare and Medicaid and Social Security so that they're solvent for the long term.
The problem is allowing these budget cuts across the board to take effect is not very reassuring. They've been described as stupid, stupid, stupid by Erskine Bowles, one of the heads of the Simpson-Bowles Deficit Commission. And that's because they are truly across the board. The good gets cut with the bad. Critical programs and payrolls get cut right along with expendable things like travel to conferences. The inability to cut budgets more rationally is likely to further erode confidence in the Congress and the White House. And right now many economists are saying that Washington's deadlock is the biggest enemy of the U.S. economy.
GONYEA: NPR's John Ydstie. Thank you.
YDSTIE: You're welcome.
GONYEA: And we also heard from NPR's Tom Bowman, Julie Rovner and Brian Naylor. Thanks to you all.
NAYLOR: Thank you.
ROVNER: Thank you.
BOWMAN: You're welcome.
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