The "fiscal cliff" refers to the possibility of sequestration, a word too big for most news media. Fiscal cliff sounds more comprehensible and more dramatic at the same time. If you take away one piece of information from this post, remember that everything - yes, every bit of federal funding - is up for negotiation. Even if we avoid the fiscal cliff. consequences for federal programs might be minimal or huge. We just do not know yet.
Warning: This post will repeat - over and over - the important message that everything is subject to negotiation by Congress.
Fiscal Cliff Can Be Avoided by an Act of Congress
The fiscal cliff, or as it is formally called, sequestration, refers to the Budget Control Act (BCA), which requires Congress to reduce spending by $1.2 trillion over the next ten years. Without Congressional Action, reductions will begin in January 2013 and continue through Federal Fiscal Year (FFY) 2021. Of the $1.2 trillion in cuts the law would require - IF Congress does not act (and it will) - half of the savings would be derived from defense programs and half from non-defense programs.
So, Congress can avoid sequestration by passing legislation to avoid it. The deadline for the "fiscal cliff" is Jan. 2, 2013. The new Congress will be sworn in on Jan. 3. The Bush tax cuts are set to expire on Jan. 1.
Congress Tends to Act Close to Deadlines
The truth is that no one actually knows whether sequestration will happen or what will be negotiated to avoid its harsh consequences because this is an ever-changing situation that will probably meander in negotiations and hit some crisis points before it is resolved close to the January deadline. Congress tends to be like college students, working hard on tasks only when an assignment is almost due. That is part and parcel of the legislative/sausage making dance. It is Congressional gamesmanship.
This is the messy part of democracy. Read about the constitutional convention and the state conventions that considered the Constitution. We are upholding a long tradition.
Everything Is on the Table for Negotiation
National organizations, lobbyists, businesses and others are paying attention. Why? What is important is that Congress can consider all aspects of the federal budget as its members ruminate on and trade chits about what will be funded and how much money will go for what. That means that cuts might take place for certain programs, but not necessarily in the amounts that sequestration would compel. What programs will be affected and in what amounts remains in question.
Indeed, even programs not subject to BCA/sequestration/fiscal cliff reductions could be on the table for negotiation. Right now might be a good time to let your representatives in the House and Senate know what your valued services are and about your funding streams.
Why Is Congress Likely to Act to Avoid Sequestration?
With gridlock on Capital Hill a common occurrence, how do we know that Congress will act? What exactly is the threat that will light a fire under 435 Congressional offices? Only if Congress acts will the country avoid sequestration. Such inaction will not be perceived as a good move by most voters. If there is any message from the election, it is that the public is really wants Congress to do more than have members stare at each other from across the aisle and refuse to do anything.
Sequestration Translation for Transportation
The following is a summary of what the fiscal cliff - or sequestration, as it is properly known - would mean for transportation were sequestration to happen. We do not believe this will occur. According to the Transportation Issues Daily, in a post about sequestration, exempt from the sequestration requirements are programs supported by the highway fund, including:
- Federal-Aid Highways
- Highway Traffic Safety Grants
- NHTSA operations and research, and National Driver Register
- Motor Carrier Safety Operations and Programs
- Motor Carrier Safety Grants
- Transit Formula and Bus Grants
- Airport Improvement program
Transit programs other than those above, however, would be subject to sequestraion, such as New Starts and Amtrak. (Also affected would be some Federal Aviation Administration programs.) And, the Department of Transportation would not be the decision maker to apportion the cuts. Transportation Issues Daily reported:
The spending cuts will be across the board and determined by the Office of Management and Budget (OMB). The final say on how the sequester will be implemented will be made by OMB in the coming months.
USDOT will have no discretion or authority in determining the level of cuts by program. In other words, USDOT will not have the authority decide to cut more from an aviation program and less from a transit program.
Exempt ≠ Hands Off
Again, the law's provisions should not be viewed as any indication of what will actually occur. It's provisions are better thought of as the threat that will induce Congress to act. It might happen, but probably not. And anything exempt from the terms of the so-called fiscal cliff law can be touched by Congress - and that most likely means reduced. Transportation Daily continues to closely watch sequestration developments. Please note that it offers its own opinions as well as facts.
Sequestration and MAP-21
Although MAP-21 retains the highway trust fund and mentions funding amounts that are mostly not subject to sequestration (with some of the exceptions mentioned above), that does not mean that transit, community transportation and even highways are home free. None of the money under MAP-21 is guaranteed.
The last two authorizations (SAFETEA-LU and TEA-21) treated transit spending as "mandatory," which meant that it was not subject to the vicissitudes of annual appropriations. MAP-21 did not contain such language.
Nothing Is Exempt from Reductions
Congress can do whatever it wants, including making funding changes to programs unmentioned in the BCA (the fiscal cliff law) or explicitly exempt. I repeat, "Congress can do whatever it wants." It can change whatever it wants in the negotiations that are taking place between now and January. Funding amounts for MAP-21 programs, for human services, for jobs programs, or for anything might stay the same or be reduced. Increases are extremely unlikely.
Indeed, whatever happens in these negotiations, with less and less money going into the highway fund - with increased fuel efficiency and overall less driving - and appropriations amounts up in the air - transportation access and infrastructure across all modes will be dealing with greater uncertainties in funding.
Learning about Sequestration
If you want to know what the BCA law provides for exactly in terms of reductions were Congress to fail to act, the White House released the congressionally-mandated report detailing the impacts of sequestration for each federal agency's programs.
Staff at some state departments of transportation and transit agencies are being briefed about sequestration prospects. Colorado, Texas and Maryland are examples. Maryland officials do not believe sequestration would have much impact on its transportation programs because most of the federal money the state receives is via the highway fund and it does not have any New Starts projects slated for 2013. The assumption is that Congress and the President will work to address sequestration before 2012 is up.
National Organizations Educate Constituencies
Here is information and links that national organizations have provided. And what is important to remember? The fiscal cliff scenario is unlikely to become reality. The prospect of it happening is a threat hanging over Congress' capital dome. These are risks that different organizations declare would occur were we to allow sequestration to happen - in other words, the other side of the fiscal cliff.
National Association of Regional Councils
NARC has a wealth of information about the possible consequences of sequestration.
1. Presentation with information about what sequestration might mean for local economies.
2. Summary of the White House report on sequestration reductions.
National Association of Development Organizations
Archived webinar - Sequestration. The webinar addresses sequestration's potential impact on regional development organizations and local governments, as well as the impact that it could have on the economy as a whole, and federal government spending and programs. The day before the Nov. 6 election, NADO offered an update about the possible political options, what is at stake, and predicted economic ramifications. NADO summarizes a political publication's prediction that "the most likely option is another set of stop-gap measures that would delay a more permanent policy change until 2013 or later."
Association of Metropolitan Planning Organizations
AMPO offers its perspective to its members about how Congress is handling the prospect of sequestration before the election and into early 2013.
Congressional leaders agreed to punt FY13 appropriations bills into next year, bypassing what could have been a prolonged and politically nasty partisan battle prior to the election. With this move, Members avoid having to cast votes that could haunt them in their re-election bids. This also avoids short-term CRs [continuing resolutions] that have in the past led to government agency preparation for shut downs. The agreement keeps the federal government funded from October 2012 to March 2013. Senate Democrats and House Republicans agreed that both chambers will vote in September on a continuing resolution for the first half of fiscal 2013, using the $1.047 trillion discretionary spending limit agreed to in last year’s deficit reduction law.
This budget strategy clears the way for Congress to debate how to address impending across-the-board spending cuts (sequestration), which are scheduled to go in to effect at the beginning of next year (Jan 2, 2013), as well as the expiring Bush tax cuts (end of this year). These negotiations will take place either during in the lame-duck session or possibly in early 2013. Both chambers of Congress have or will pass legislation that establishes markers for how they would like to see the pending tax and spending issues resolved.
American Association of State Highway Transportation Officials
AASHTO is alerting its constituency to the "fiscal cliff" when MAP-21 lapses instead of sounding alarm bells about sequestration.
[T]he Congressional Budget Office (CBO) projects that massive cuts in both highway and transit funding will occur in fiscal year (FY) 2015 if MAP-21 expires and nothing replaces it. ... [T]he CBO projects highway funding would be slashed to $4.5 billion in FY 2015 from $40 billion annually right now, with transit program funding shrinking to $3.5 billion from $11 billion.
Seniors and Sequestration
National Association of States United for Aging and Disabilities
NASUAD posts a table, Impact of sequester on fiscal year 2012 Older Americans Act programs, which lists the amounts each program is predicted to receive with and without sequestration.
National Association of Area Agencies on Aging
N4A sent out an alert to its members in September that sequestration would have devastating consequences. It noted speculation that "17 million meals for seniors would be lost and 1.5 million fewer low-income people served by the Community Services Block Grant." N4A encouraged its members to tell their federal representatives how important it is to older Americans to avoid sequestration.
[Tile in London's Bank Street Underground station. Mind the gap.]
Leadership Council of Aging Organizations
The council states in an Issue Brief that "Any “savings” from the sequester would pale in comparison to the added costs, resulting in premature nursing home placement for seniors who can no longer stay in their homes and communities because of reduced federal funding."
CQ Today Online News summarizes what is at stake, the positions of both political parties, and activity in Congress.
Possible scenarios are: (1) nothing gets done; (2) a deal is made to avert sequestration; or (3) sequestration is averted and big decisions are made. The expiration of the Bush tax cuts at about the same time adds urgency to the lame luck session of Congress and what will be negotiated.
The deadline for the "fiscal cliff" is Jan. 2, 2013. The new Congress will be sworn in on Jan. 3. The Bush tax cuts are set to expire on Jan. 1. And what should you remember? Everything is up for negotiation.
[Editors note: Due to the limits on label characters for this blogging platform, this post will not be listed under the labels for the organizations mentioned.]
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