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Pursuing “Flexibility” Over Replacing Sequestration Is a Distraction — or Worse

Many policymakers want to give the President one of Congress’s preeminent powers — to decide how to spend federal funds — so he can shift sequestration cuts from one program to another in hopes of avoiding some of sequestration’s worst effects.  Yet these “flexibility” proposals, which some policymakers want to include in current budget negotiations, can’t solve the two basic problems that the President and Congress face on this year’s budget.

First and most important, overall funding levels under sequestration are simply too low.  While proponents often sell flexibility as a way to shrink the sequestration cuts in certain popular areas, they seldom note that this can only occur if the cuts in other areas get deeper, thus making the impact on those other areas even worse.

The second problem is the risk posed by funding allocations that are out of date.  Allocations become outdated when Congress does not adjust them annually through regular appropriations bills (or “omnibus” legislation that packages these bills together) but instead adopts continuing resolutions that reflect prior-year allocations, even if circumstances or priorities have changed.  Last year, Congress funded fewer than half of all federal agencies through regular appropriations legislation; it funded the rest through a continuing resolution that reflected priorities of one or even two years earlier.

These two problems — sequestration and the absence of regular appropriations bills — are, of course, interrelated.  Sequestration’s low funding requirements invariably force cuts to programs with strong popular support, making it more difficult for Congress to pass appropriations bills.  But without new appropriations bills, outdated funding priorities remain in place, intensifying the effects of the cuts.

The current budget negotiations largely focus on addressing the inadequate discretionary funding levels under sequestration by replacing some or all of sequestration’s cuts with alternative savings from entitlement programs or revenues.  Indeed, the negotiators do not disagree over whether to replace the cuts, only how.  If they agree on higher funding levels for appropriated programs, then Congress can more easily craft appropriations bills that better reflect current needs and priorities.

Once that occurs, there is no need for a flexibility measure that grants broad new powers to the executive branch to shift funds among programs.  (Typically, agencies already have some flexibility within their budgets to shift funds to address changing circumstances.)  Added flexibility becomes relevant only if Congress fails to set more adequate 2014 funding levels and fails to enact appropriations bills, instead relying on a continuing resolution for the rest of the year.  But, even then, flexibility can’t solve the fundamental problem of inadequate funding levels under sequestration.

Negotiators should not spend time now focusing on flexibility.  At best, it’s a distraction; at worst, it could give policymakers the false impression that they can meaningfully reduce the problems created by sequestration in 2014 without raising discretionary funding.