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Sequestration Deal Should Avoid Harmful Offsets, Divide Funds Equitably

Policymakers should raise the appropriations caps for 2018 and beyond to keep them from holding funding well below what’s needed to address important priorities. But policymakers must also ensure that any provisions to offset the cost of cap increases don’t cause harm — for example, by reducing health coverage or worsening poverty and hardship — and that the additional funding is equitably distributed to meet national needs, improve the government’s ability to provide important services, and fund investments that boost workforce productivity and grow our economy.

The 2011 Budget Control Act (BCA) set tight caps on overall defense and non-defense appropriations for each year through 2021, and the caps were subsequently reduced by the BCA’s “sequestration” process. Recognizing that the post-sequestration caps were too low, the President and Congress enacted three bipartisan sequestration relief packages in recent years, covering one or two years at a time and providing equal relief to defense and non-defense funding.

The most recent of those measures expired in September, however, and without a new agreement, full sequestration cuts to the appropriations caps will return in 2018. Under full sequestration, the 2018 non-defense cap would be 16 percent below the comparable 2010 level adjusted for inflation, and 21 percent below 2010 if also adjusted for population growth.

While addressing these shortfalls is important, the President and Congress shouldn’t simply replace sequestration cuts with alternate cuts that are just as bad — or worse. In particular, policymakers should not offset the cost of reversing these cuts with measures that reduce health insurance coverage (such as the provision that congressional Republicans proposed this year to offset the cost of extending funding for the Children’s Health Insurance Program and community health centers) or make health care less affordable. Nor should they include offsets that worsen poverty and inequality or diminish opportunity, such as with proposals that make college more expensive.

In past sequestration relief packages, policymakers found offsetting savings that adhered to these guidelines and avoided harmful changes. They should again use these principles in evaluating any offsets for a new budget agreement. They certainly shouldn’t pay for domestic investments with provisions that take away health coverage or worsen poverty just after the House and Senate passed bills to give $1.5 trillion in unpaid-for tax cuts mainly to high-income households and large corporations.

Raising the caps is just a necessary first step in finalizing 2018 appropriations. Once policymakers decide on overall funding levels, they must divide the non-defense total among the appropriations subcommittees, which would then set funding levels for individual programs.

As we’ve described, lawmakers made disappointing choices in 2016 when implementing the previous sequestration relief package. The Labor, Health and Human Services and Education subcommittee and the Transportation and Housing subcommittee each received increases of 3.6 percent, compared to an average increase of 6.9 percent for the other nine non-defense subcommittees, and low-income appropriated programs received less than half the average increase of other non-defense programs.

Policymakers should divide the additional funds from new sequestration relief more equitably and target funding for individual programs to those that enable the government to meet critical needs. For example, they should direct funding towards programs that invest in job training and early education, help low-income individuals afford the basics such as housing and child care, and enable the government to better serve the public such as by adequately funding core government functions like the 2020 decennial census, the Social Security Administration, and the IRS.