FACES OF AUSTERITY 2.0

How Budget Cuts Continue to Make Us Sicker, Poorer and Less Secure

“The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…”

— The United States Constitution, Article 1, Section 8

The Founding Fathers granted Congress the power to collect taxes to provide for the “general welfare” of the United States. As the size, economy, and complexity of the United States expanded, so too did the federal government’s roles and responsibilities in protecting Americans—providing for societal needs when the market does not and when individuals are unable to address these needs themselves. Using taxes paid to the Treasury, the federal government built an interstate highway system, connecting Americans across the country, and funded research that led to the development of the Internet, connecting us to the rest of the world. It invests in education, the foundation of economic opportunity. It protects our safety and security, in daily living and times of crisis. It invests in medical research to discover new cures that save lives. It provides training to an unemployed worker and a warm meal to a homebound senior. It provides a basic infrastructure that supports our modern way of living. Indeed, the taxes the federal government collects from us come back to us and our communities in many ways that make our society stronger and fairer.

The federal government does all this and more in the background every day, and thus we often take it for granted. As you prepare for work in the morning, you may not stop to realize the federal government makes sure the water you use to brush your teeth is safe. You don’t think twice about whether or not your breakfast will make you sick, because the federal government is monitoring the quality of eggs, bacon, orange juice, and coffee beans. As you commute to work, you may not notice that the bus or train you ride is funded by federal subsidies and grants. Or that the federal investment in your education and job training may have helped you qualify for your job. Once at work, you are free from unsafe conditions because the federal government sets basic safety standards for your workplace and holds your employer accountable to them.

What is NDD?

When lawmakers and policy wonks in Washington talk about how and on what your taxpayer dollars are spent, they generally think in terms of two types of programs—“mandatory” and “discretionary.” Mandatory programs include Social Security, Medicare, Medicaid, and Supplemental and Nutrition Assistance Program or SNAP (formerly “food stamps”). The funding for these programs generally flows automatically and is not determined by annual appropriations bills. Funding for discretionary programs is set each year through the annual budget process. That is, Congress retains complete discretion, or choice, each year on whether and at what level to fund programs in the discretionary category. But these programs are far from dispensable.

Discretionary programs are generally described as: “defense discretionary,” which includes the Pentagon’s budget and related military programs; and “nondefense discretionary” or NDD, which includes everything else. NDD programs include core functions the government provides for the benefit of all, including medical and scientific research; education and job training; infrastructure; public safety and law enforcement; public health; weather monitoring and environmental protection; natural and cultural resources; housing and social services; and international relations. Every day these programs support economic growth and strengthen the safety and security of every American in every state and community across the nation. NDD programs support our economy, drive our global competitiveness, and provide an environment where all Americans may lead healthy, productive lives. These programs help the federal government fulfill the Constitutional obligation to “provide for the general welfare of the United States.”

Nondefense Discretionary Spending, FY 2017

    Source: Center on Budget and Policy Priorities calculations using Congressional Budget Office data

    NDD IN YOUR LIFE

    You head into the kitchen to scramble eggs for breakfast – NDD is safe food.

    You turn on the tap for a glass of water – NDD is clean water.

    You take your medication for blood pressure – NDD is drug discovery and safety.

    You check the weather report and it calls for rain, so you grab your umbrella – NDD is the National Weather Service.

    One of your children attends public school and another has financial aid to pay for college – NDD is education and college access.

    You ride the subway to work – NDD is public transit.

    You see the news reports of the FBI thwarting a domestic terrorist plot – NDD is public safety.

    You use the internet to check into your flight online – NDD is technology.

    At the airport you pass through security and board your plane, which takes off, flies, and lands safely – NDD is security screening and air traffic control.

    You enjoy visiting Mount Rushmore on a family vacation – NDD is the National Park Service.

    ABOUT NDD FUNDING

    Despite the vast array of important services provided through NDD spending, it remains a small and shrinking share of the federal budget and our overall economy. Since 1962, NDD represented less than one-fifth of the entire budget, and less than 4 percent of the country’s economy (gross domestic product or GDP).

    Nondefense Discretionary Spending Falling to Historic Lows
    (Spending as Percent of Gross Domestic Product)

    Source: https://www.cbpp.org/non-defense-discretionary-spending-falling-to-historic-lows-4

    NDD spending has been cut dramatically and disproportionately in recent years as lawmakers work to reduce the deficit, even though experts agree these programs—which are shrinking as a share of our economy — don’t contribute to our nation’s mid- and longer-term debt problem.

    The cutting began in 2011, when Congress enacted an appropriations package that reduced NDD funding more than $40 billion below the year before. The cuts averaged 8 percent, but many programs were cut more deeply or eliminated entirely.

    Four months later, Congress enacted the Budget Control Act of 2011 (BCA), which set tight caps on overall defense and nondefense appropriations for each year from 2012 through 2021.  These caps took as their starting point the reductions already made in 2011 and then mandated further reductions in subsequent years.

    The effect of the caps was compounded by another provision of the BCA, which established a special congressional committee to develop and recommend measures to reduce budget deficits by an additional $1.2 trillion over ten years.  In the event that such measures were not enacted by 2013, the BCA set up a fallback process known as “sequestration” to achieve that deficit reduction through automatic spending cuts, with most of those targeted to discretionary programs, both defense and non-defense.

    Sequestration was in fact triggered, as Congress failed to reach agreement on a deficit reduction package.  In the first year, 2013, the appropriations cuts were made across the board, with the non-defense reductions set at 5 percent. For years after 2013, however, the cuts are made by reducing the appropriations caps below the levels originally set by the BCA (leaving decisions as to which specific programs will be cut to the annual appropriations process).

    Recognizing the damage caused by these reductions, Congress eventually enacted a series of measures to scale back—but not eliminate—sequestration by substituting other savings, generally two years at a time.  So far, partial sequestration relief measures have been enacted for all years through 2017.

    The net effect of these successive waves of budget cutting has been a significant reduction in NDD funding.  In 2017, total NDD subject to the caps is 13 percent below 2010 after adjustment for inflation and 18 percent below 2010 after adjustment for both inflation and population growth.  With various high-priority programs increasing or cut less than those averages, others were cut considerably more.

    THE IMMEDIATE THREAT

    The most recent of the partial sequestration relief measures covered 2016 and 2017, and therefore—unless agreement is reached on further relief—full sequestration cuts will take effect in 2018.  This will leave the 2018 NDD cap about $3 billion below 2017 in unadjusted dollars—or about $14 billion below 2017 in inflation-adjusted terms.  Again, with some high-priority items increasing, other programs will need to be cut by more than the average.

    The reduction to the 2018 NDD cap scheduled under current law would bring the cumulative NDD cuts since 2010 to 16 percent after adjusting for inflation and 21 percent after adjusting for population growth, as well.  Measured relative to the size of the economy, 2018 NDD spending would fall to 3.1 percent of GDP, which would be equal to the lowest percentage recorded since at least the early 1960s.

    In September, Congress passed a continuing resolution through December to keep the government running at current levels. Not only does current funding fail to meet need, but to continue at this level through the end of the year would require an act of Congress to raise the budget caps similar to the Bipartisan Budget Act of 2015.

    Nondefense Appropriations
    (in Billions of 2018 Dollars)

    *with sequestration
    Source: Center on Budget and Policy Priorities