Big U.S. spending cuts were 'smoke and mirrors'
"The largest annual spending cut in our history," President Barack Obama called it in a televised speech. To prevent a government shutdown, the parties had agreed to slash $37.8 billion: more than the budgets of the Labor and Commerce departments, combined.
At the Capitol, Republicans savored a win for austerity. There would be "deep, but responsible, reductions in virtually all areas of government," House Appropriations Committee Chairman Harold Rogers, R-Ky., promised a few days later, before the deal passed.
Nearly two years later, however, these landmark budget cuts have fallen far short of their promises.
In some areas, they did bring significant cutbacks in federal spending. Grants for clean water dried up. Cities got less money for affordable housing.
But the bill also turned out to be an epic kind of Washington illusion. It was stuffed with gimmicks that made the cuts seem far bigger - and the politicians far bolder - than they actually were.
In the real world, in fact, many of their "cuts" cut nothing at all. The Transportation Department got credit for "cutting" a $280 million tunnel that had already been canceled six months earlier. It also "cut" a $375,000 road project that had been created by a legislative typo, on a road that did not exist.
At the Census Bureau, officials also got credit for a whopping $6 billion cut, simply for obeying the calendar. They promised not to hold the expensive 2010 census again in 2011.
Today, an examination of 12 of the largest cuts shows that, thanks in part to these gimmicks, federal agencies absorbed $23 billion in reductions without losing a single employee.
"Many of the cuts we put in were smoke and mirrors," said Rep. Mick Mulvaney, R-S.C., a hard-line conservative now in his second term. "That's the lesson from April 2011: that when Washington says it cuts spending, it doesn't mean the same thing that normal people mean."
Now the failures of that 2011 bill have come back to haunt the leaders who crafted it. Disillusionment with that bill has persuaded many conservatives to reject a line-by-line, program-by-program approach to cutting the budget.
Instead, many have embraced the sequester, a looming $85 billion across-the-board cut set to take effect March 1. Obama and GOP leaders have said they don't like the idea: the sequester is a "dumb cut," in Washington parlance, which would cut the government's best ideas along with its worst without regard to merit.
But at least, conservatives say, you can trust that this one is for real.
"There has been a shift in resolve. They have been burned in these fictional cuts. And so the sequester is like real cuts," said Chris Chocola, a former congressman who now heads the Club for Growth, a conservative advocacy group. "So I think that there is a willingness to say, 'We've really got to cut stuff, and ⅛the cuts have got to be real."
The April 2011 budget cuts ended the first big battle of Congress's current era. That spring, a new crop of House conservatives -- elected with tea party support -- was demanding large budget cuts. The legislators would risk a government shutdown to get them.
But in both parties, leaders resisted the idea of a meat-ax cut to government. There was a recession going, after all.
"Given the economic and employment crisis, we tried to limit cuts that would cause major furloughs or layoffs that would put people out of work," Rogers said in a written statement released this week. Rogers declined to be interviewed on the record, but his statement went on to say that the bill's "cuts are real, and every dollar we did not provide is a dollar saved for the American taxpayer."
The leaders found a solution, according to aides on both sides. In among the real cuts, they would mix in others that looked huge on paper but would turn out small in real life.
"The administration offered, and the Republican leadership accepted, cuts in stores of funding that ... were unlikely to be used in the future," said Richard Kogan, a former Obama administration official who is now at the nonpartisan Center on Budget and Policy Priorities. "This was conscious on both sides."
The final deal itself ran to 176 pages and included more than 250 individual reductions. Some of them certainly caused real-life sacrifice: one cut to the National Oceanic and Atmospheric Administration helped delay a crucial weather-satellite program, according to the Obama administration.
But in other cases, sacrifice was minimal. Congress, for instance, "cut" $14.6 million from its own budget to build the Capitol Visitor Center. That changed nothing. The center was already built.
To sketch the bill's biggest impacts, The Washington Post focused on the 16 largest individual cuts. Each, in theory, sliced at least $500 million from the federal budget. Together, they accounted for $26.1 billion, two-thirds of the total.
In four of those cases, the real-world impact was difficult to measure. The Department of Homeland Security officially declined to comment about a $557 million reduction. The Department of State, the Department of Agriculture and the Federal Emergency Management Agency -- whose cuts totaled $1.9 billion -- simply did not answer The Post's questions despite repeated requests over the past month.
Among the other 12 cases, there were at least seven where the cuts caused only minimal real-world disruptions or none at all.
Often, this was made possible by a little act of Washington magic. Agencies got credit for killing what was, in reality, already dead.
At the Census Bureau, for instance, officials had already said they didn't need the more than $6 billion they had spent the year before. That money had paid for the once-a-decade 2010 census. There wasn't, of course, another census planned in 2011.
But to Congress, that was still a cut. The budget bill formally revoked the "budget authority" needed to spend the $6 billion that the Census Bureau didn't want. On paper, it looked like a huge reduction. But, at the Census Bureau, no employees were laid off. No projects were finished late.
At the Transportation Department, Congress canceled $630 million in "orphan earmarks." These were the wandering ghosts of the highway budget: pots of money assigned for specific road projects, which were still sitting unspent years and years later.
Often, this money seemed unlikely to ever be spent. Many projects had been canceled. In one case, the funds were earmarked for a road that did not even exist.
In 1998, Congress had earmarked $375,000 to upgrade "State Road 31" in Columbus, Ind. But there is no State Road 31. It was a mistake. So the money sat. "That was funding that we just couldn't otherwise use," said Will Wingfield of the Indiana Department of Transportation.
In the 2011 budget deal, Congress took that money back. In Indiana, Wingfield said, there was no noticeable difference. The state was already spending its own money to fix the real-life road, U.S. Route 31, that Congress was supposed to help.
"Don't count that as a cut," said former representative David McIntosh, R-Ind., whose earmark was responsible for the imaginary road. He said the mistake wasn't his fault: The state got the name wrong when it asked for money in the first place. "It never added, and would never add, to the debt. Your whole goal here is to reduce the amount of public indebtedness."
Both Democratic and Republican aides, however, defended this process in recent interviews. They argued that, under certain conditions, this "orphan" money could still have been spent by states or the federal government. To cut it was to eliminate that possibility.
"People tended to say, 'Oh, these will never be used again.' But while cuts in orphan earmarks were sitting on the Hill awaiting enactment, cities and States were spending the money, because they feared it was going to go away. It was real money," Robert Gordon, an official at the administration's Office of Management and Budget, said in a statement sent by e-mail.
Anyway, he said, these are the rules Washington has always played by.
"Budget authority is the authority to spend," Gordon said. "You cut budget authority, you cut the ability to spend."
But this approach led, in some cases, to situations where large "cuts" on paper translated into relatively small changes in reality.
At the Pentagon, for instance, the April 2011 bill required a whopping $6.2 billion cut to military construction. But through a combination of congressionally installed gimmicks and military ingenuity, the Pentagon escaped nearly unscathed.
It happened like this: First, the Pentagon "cut" $5 billion by doing nothing at all. This was money that had been needed the year before to help close out the Base Relocation and Closure (BRAC) process. The Pentagon had already said it wouldn't need to spend that much money in 2011.
It didn't. That counted as a $5 billion "cut."
Beyond that, defense officials found 94 existing projects where bids had already come in lower than expected. They added up those savings: $397 million. Then they looked for the bureaucratic dead: projects that had already been nixed for unrelated reasons. There was a sniper range in Louisiana. A headquarters in Djibouti. Air base upgrades in Guam. That was $568 million more.
On and on it went, as Pentagon officials filled out their allotted cut painlessly. In the end, officials said, there was just one instance where the Pentagon "lost scope" purely as a result of the landmark budget cuts. Meaning: where the military had to cut something it actually wanted to keep. That was a project at a base in Qatar - a medical-administration building and two warehouses. Total real-world savings: $25.2 million.
Just 0.4 percent of the total that Congress counted as "cut" on paper.
Not all the bill's cuts were illusory, however. The Post's analysis found five large cuts that turned out to be very real.
None of them actually caused an agency in Washington to shed federal personnel. Instead, they reduced the money that passed through those agencies to state and local projects.
There was a $997 million decrease in funding for Environmental Protection Agency programs to loan out for water-restoration projects. The result, EPA officials estimated, was that 210 fewer projects received funding.
An additional $942 million was cut from community development funds, shared by 1,200 cities and towns around the country. In Boston, for instance, that translated into a funding cut of $3.7 million from the year before. The money is used, in part, to fix up dilapidated homes. On average, the city needs $27,000 to fix up a home so it's ready for a tenant in need.
"We just do less volume," said Sheila Dillon with the city of Boston. "It's taking us longer to fund good affordable housing projects, and subsequently there's people who are spending too much money on rent."
One of the bill's sharpest impacts was felt in Calexico, Calif., 2,500 miles away from Washington. For years, people there have complained that the local border crossing cannot handle enough cars: Lines back up for hours on the Mexican side, which provides 60 percent of Calexico's retail shoppers.
To fix that problem, the U.S. General Services Administration had proposed building a new crossing, adding extra inspection lanes to speed travelers through. But after the April 2011 cuts, the GSA "zeroed out" that project, on which it had proposed to spend $84 million in 2011.
Now local officials are hoping for an unorthodox solution: They want a private company to build the border post and then lease it back to the government.
Without that, "we don't have a breath of hope for another five years at the very least," said John Renison, an Imperial County, Calif., supervisor whose district includes the Calexico crossing. "It looks like there's just not the political will to pay for the crossing, even though they know they need it."
Even though the April 2011 bill made these real reductions, its legacy has been defined by its illusions. The impressive-sounding "cuts" added in to placate hard-charging conservatives have -- upon further review -- served to alienate them instead.
Since then, in fact, Congress has tended to eschew the line-by-line approach that guided the April 2011 cuts. Instead, it has simply slashed a percentage off the top of agency budgets. The deal that ended the debt-ceiling debate cut $25 billion this way.
Now Washington is facing the "sequester," which would cut $85 billion starting March 1. The administration has sought to persuade Republicans to cancel it or replace it with a package of spending cuts and tax increases.
That, at times, has made for an awkward argument. Two years later, it appears that some of the budget cuts from April 2011 turned out to be less painful than originally believed. But the White House says that can't happen again.
This time, it says, the cuts would be very real and very painful.
"Reductions that were possible in 2011 are not possible in 2013," said Gordon of the Office of Management and Budget. "The resources that could be cut, they've been cut. The low-hanging fruit is gone."
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