A Nonprofit’s Guide to Sequestration

Obama
mistydawnphoto / Shutterstock.com

September 14, 2012; Source: National Journal

Last week, the NPQ Newswire reported on President Obama delaying his administration’s required report on how it will make the cuts required of sequestration. Now the report is in. 

President Obama’s sequestration plan, or at least the plan filed by the administration’s Office of Management and Budget, was released last Friday afternoon, guaranteeing relatively reduced Saturday news coverage. 

With this report, the administration missed its chance to make the argument that sequestration is a kind of brainless method of budget cutting, a flat across-the-board mechanism of $109 billion a year for nine years that will take a serious toll on important domestic programs starting January 2 – unless, of course, Congress cuts an alternative deficit reduction deal with the President. 

Although the administration’s sequestration formula consists of half domestic programs and half military, the domestic formula shields most entitlement programs plus Medicaid, veterans benefits, and unemployment insurance. The president could make a strong point of how indiscriminate the cuts are to programs that serve Americans in need. We looked at the report and picked out a few areas of cuts of potential interest to nonprofits: 

  • $74 million from rural assistance in USDA’s Rural Housing program; 
  • $2 million from rural cooperative development grants;
  • $79 million from the Census Bureau;
  • $879 million from the non-defense-related programs of FEMA;
  • $325 million from HUD’s public housing operating funds and $154 million from public housing capital funds;
  • $1.53 billion in HUD’s tenant-based rental assistance and $772 million in project-based rental assistance;
  • $279 million from HUD’s community development fund;
  • $156 million from homeless assistance grants;
  • $82 million from the HOME program;
  • $27 million from housing for persons with AIDS;
  • $14 million from housing for persons with disabilities;
  • $31 million from housing for the elderly;
  • $21 million from juvenile justice programs;
  • $13 million from community-oriented policing programs;
  • $33 million from programs directed at preventing violence against women;
  • $37 million from community service employment for older Americans;
  • $272 million from DOL’s training and employment services and $140 million from the Job Corps;
  • $18 million from Treasury’s Community Development Financial Institutions program;

And plenty more. 

Overall, non-defense discretionary spending would be cut 8.2 percent. Remember that these are just the numbers for FY2013. There’s most of a decade left to go to meet the long-term sequestration targets. One would think that the Obama administration would be using the non-defense cuts to rally nonprofits to advocate for the protection of the social safety net.

It appears, however, that the verve and vigor of the OMB report is devoted to the alarms sounded by the administration about the meaning of the cuts for the defense budget. The president has chosen to protect military pay and benefits from the $55 billion cut in the Pentagon budget, making cuts in other defense budget lines even deeper, such as spending for weapons procurement (few F-35s, P-8s, and Stryker vehicles, for example) and shipbuilding. Even the money that pays for part of military operations in Afghanistan would be cut back, though the president has committed to a reduction in forces in 2013 in preparation for a full withdrawal in 2014. Overall, it adds up to a 9.4 percent reduction in discretionary defense spending and a 10 percent cut in mandatory defense allocations. 

Given the bloated Pentagon budget, spending more than China on the military by a factor of five, spending more than twice the combined military budgets of the four next highest military spending countries (China, Russia, the U.K., and France), these are the cuts that the Obama administration should welcome. But the whining from Defense Secretary Leon Panetta and his senior staff continues. Republicans in Congress want to revise the sequestration formula to protect the military budget, meaning domestic programs would take a proportionally larger hit. If nonprofits don’t tell the president, Secretary Panetta, and Congress that it’s high time that the Pentagon budget got cut, then they will have missed their moment and their message. –Rick Cohen