White House warns of 'deeply destructive' cuts in sequestration report

Friday - 9/14/2012, 2:39pm EDT

The across-the-board budget cuts, known as sequestration, set to take effect Jan. 2 would be "deeply destructive" to national security and core civilian agency programs, according to a comprehensive report from the White House detailing the impact of the cuts on specific programs and accounts.

The $109 billion in cuts coming next year — split evenly between Defense civilian agency budgets — would slash Defense discretionary spending by 9.4 percent and civilian agency spending by 8.2 percent.

In other words, every agency program not exempt from the cuts would be reduced by those amounts. The report warned this "blunt, indiscriminate" approach to deficit reduction would imperil key defense and civilian programs alike.

The Defense Department would be able to shift funds "to ensure war fighting and critical military readiness capabilities were not degraded," but nondeployed units, equipment and facilities, and research and development efforts would all take a hit.

On the civilian side, the report warned of millions of dollars in cuts to individual agency programs that would mean fewer FBI and Border Patrol agents on the job and reduced food-safety inspections.

Senior administration officials, who spoke to reporters on background, said they had not prepared an analysis of the number of federal workers who could be furloughed because of the cuts.

"Clearly, if sequester were to occur, this would have a significant impact on the federal workforce," the official said.

Most mandatory, or direct, spending is exempt from sequestration. Medicare, however, is not exempt but is limited to a 2 percent reduction in payments to providers.

Other nondefense mandatory programs not exempt from sequestration will face a 7.6 percent cut, while mandatory defense spending is subject to a 10 percent reduction.

Overall, after the reductions to Medicare, discretionary spending for civilian agencies would be cut by $38.02 billion. The Defense Department faces a $54.66 billion cut.

The report details the sequestration impact on 1,200 budget accounts with "sequestrable funding" — agency funding subject to the cuts. Some programs are exempt from the cuts. For example, the Veterans Affairs Department, including administrative costs, is entirely exempt.

Officials said the administration had no discretion in determining which programs would be exempt from the cuts.

"The administration cannot choose what programs to exempt, or what percentage cuts to apply," the official said. Rather, these were determined by the 2011 Budget Control Act, which Congress and the administration agreed to last summer to raise the government's borrowing limit and avoid a default.

The report stressed that its findings are preliminary and based on fiscal 2012 enacted levels and not the funding levels set by the six-month continuing resolution passed by the House this week.

The White House's report was required by the Sequestration Transparency Act, which both the House and Senate overwhelmingly approved in August. The law set a 30-day deadline for the Obama administration to report on how the automatic cuts would impact specific budget accounts. The White House was a week late in delivering the report.

Senior officials emphasized that the cuts "were never meant to be implemented; they were meant to be a forcing function for balanced deficit reduction."

In the meantime, the Office of Management and Budget has instructed agencies to continue normal spending and operations.

"In the very unfortunate event that the sequester would need to be implemented, OMB will be prepared to implement," the official said. "We've prepared for contingencies before."

The administration, along with some Democratic lawmakers, has proposed what they refer to as a "balanced" deficit-reduction alternative, composed of spending cuts and tax increases.

House Republicans have introduced a number of alternatives, including the Sequestration Replacement Act, which passed the House earlier this year. None of the proposals, however, have garnered enough support to move forward in the Democratic-controlled Senate.