Surprise: Obama Has More Flexibility Under Sequestration Than He’s Letting On

One of the main features of Obama’s sequestration demagoguery is that he does not have the flexibility to decide which funds are cut, and that he is not able to direct funds from one area to another in order to preserve essential government functions and personnel. This is why he’s been going around saying that teachers will have to be laid off, the border will go unprotected and illegal crossers released, planes will fall from the sky; essentially that the world as we know it will end.

Aside from the fact that a 2% cut in future spending should not lead to any of the above outcomes, it appears as though all of this doomsday speech is nothing but rhetoric on Obama’s part (albeit highly-focused political rhetoric). Specifically, it appears that the sequester actually grants Obama the power to prioritize how the cuts are implemented. The Wall Street Journal explains:

According to Mr. Obama and his budget office, the sequester cuts are indiscriminate and spell out specific percentages that will be subtracted from federal “projects, programs and activities,” or PPAs. Except for the exemptions in the 2011 budget deal, the White House says it must now cut across the board regardless of how important a given PPA is. Food inspectors, say, will be treated the same as subsidies for millionaire farmers.

Not so fast. Programs, projects and activities are a technical category of the federal budget, but the sequester actually occurs at the roughly 1,200 broader units known as budget accounts. Some accounts are small, but others contain hundreds of PPAs and the larger accounts run to billions of dollars. For the Pentagon in particular, the distinction between PPAs and accounts is huge. This means in most cases the President has the room to protect his “investments” while managing the fiscal transition over time.

Congress might have intended for the sequester to apply to PPAs, but they also wrote a sloppy law at the 11th hour. The Budget Control Act of 2011 disinterred the lapsed sequester rules of the Gramm-Rudman Deficit Control Act of 1985, though without anyone looking at the details.

Take the normal household budget as an (imperfect) analogy. The entire budget would represent the federal budget, we’ll say each category (groceries, entertainment, etc.) represent a budget account, and each item (vegetables, snack foods, dvd rentals, sporting events and so on) represent projects, programs, and activities (PPAs). In a nutshell, Obama has been exclaiming that the sequester is a hatchet that is forcing him to cut as much spending on vegetables as on snack foods; on DVD rentals as four tickets to an NFL game. However, according to Gramm-Rudman Deficit Control Act of 1985, a sequester applies only at the level of the budget account, therefore Obama should have the authority to direct department heads to shift spending from one PPA to another – in other words, cutting out the junk food so that we can still have our vegetables.

Ironically, these rules only apply when the government is operating under continuing resolutions (CRs). If a budget was actually passed and spending was being so directed, then sequestration would find its way down to individual PPAs – the Democrats’ failure to pass a budget looks to have backfired on them in this instance.

After some wonkishness on PPAs and Gramm-Rudman, the WSJ continues:

In any case, Republicans in Congress are prepared to give Mr. Obama still more spending flexibility than he already has to mitigate any damage, real or imagined. One option is to lock in spending at post-sequester levels and grant department heads so-called transfer authority to shift cash between accounts, after consultation with the committees on the Hill.

Erika Johnsen has more over at Hot Air on the plan offered by Sens. Inhofe (R-OK) and Toomey (R-PA) to grant authority to the five service chiefs to transfer funds among PPAs in the defense budget to mitigate the effect of the “cuts” to the DoD, including an expansion of this authority to the various department heads for the remainder of the programs affected by sequestration.

As the WSJ surmises:

Mr. Obama ought to love that, since it is precisely the administrative state he says he wants—the rule of technocrats who evaluate budget priorities without political interference. But liberals are now howling about more liberal executive power because this plan would also very modestly reduce the size of government.

It would also negate Mr. Obama’s days-of-wrath sequester campaign.

Perhaps that’s why Obama, in addition to demagoging the sequester has now taken up opposition to any such plan:

“Lately, some people have been saying, ‘Well, maybe we’ll just give the president some flexibility. He could make the cuts the way he wants, and that way it won’t be as damaging,’” Obama said.

“The problem is when you’re cutting $85 billion in seven months, which represents over a 10 percent cut in the defense budget in seven months, there’s no smart way to do that,” he said. “You don’t want to have to choose between, let’s see, do I close funding for the disabled kid or the poor kid? Do I close this Navy shipyard or some other one?”

That’s why, as Moe Lane astutely (and humorously) describes, Obama is now flailing away at trying to campaign against sequestration, hitting as many buttons as he can in hopes something hits – it’s the only thing he’s qualified to do. I am convinced that he’s campaigning so hard because he’s frightened that he’s about to become the boy who’s cried wolf one too many times; and in a scenario where unemployment and Q1/Q2 GDP data show the economy as ‘flat’ or growing a few months from now, Americans will realize that cutting government spending isn’t so bad after all, and Obama was just trying to scare people over something that wasn’t a big deal. The community organizer might just find himself without much of a community for organizing. The money line comes from the WSJ:

The real revelation is that if the world does end, it will be Mr. Obama’s choice.