GAO Report Details Widespread Impact Of Sequestration, How Agencies Cope With Budget Cuts

GAO: Agencies Reduced Services, Investments, Hiring To Mitigate Effects of Sequestration. According to a comprehensive March 2014 report from the Government Accountability Office (GAO), federal agencies significantly reduced compensation, work hours, job incentives, investments, hiring, and public services in response to across-the-board budget cuts known as “sequestration”:

Sequestration reduced or delayed some services to the public, including benefit payments, and disrupted agency operations, despite actions taken by agencies to minimize sequestration's effects. [Government Accountability Office, March 2014]

GAO: Measures To Cope With Sequestration Not Viable Long-Term. The GAO concluded in its report that many agencies do not believe the actions taken to cope with sequestration in its first year will be viable in the long term:

Sequestration reduced public benefits, delayed services, and resulted in lost wages for more than 770,000 furloughed federal employees. While agencies were able to mitigate some effects on mission, the full effects are still unknown in part because some of the actions taken by agencies made the effects of sequestration less disruptive and therefore less visible. Many of these actions, however, were short-term responses -- not sustainable long-term budget reduction strategies.

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There is, however, a limit to agencies' ability to achieve efficiencies and budget reductions by doing more with less. Agencies reprioritized many activities in fiscal year 2013 to address sequestration but their lower priority activities could remain important, mandated by law in many cases. Agencies have limited authority to reprioritize many activities and may not be able to defer or reduce funding for lower priority activities indefinitely. [Government Accountability Office, March 2014]

Fox Hypes “One Job” Lost, Alleges Obama Administration Overstated Cuts' Impact ...

Fox's Baier: Obama Administration “Led The Charge” With “Chicken Little” Statements. On the May 8 edition of Fox News' America's Newsroom, co-host Martha MacCallum and Fox anchor Bret Baier discussed the GAO report. MacCallum alleged that opponents of the budget cuts had made “doomsday predictions,” while Baier claimed that the Obama administration was “leading the charge” against sequestration with “Chicken Little” statements about the negative consequences of sequestration on federal employment. [Fox News, America's Newsroom, 5/8/14]

Fox's Carlson Wonders If “We Should Do Sequester All The Time.” On the May 8 edition of Fox News' The Real Story, host Gretchen Carlson was joined by reporter Stephen Dinan of The Washington Times to discuss the report. Carlson suggested “we should do sequester all the time” if it reduces the deficit with supposedly little effect on jobs. Dinan noted that agencies such as NASA cut services rather than employees to stay within budget limitations. [Fox News, The Real Story with Gretchen Carlson, 5/8/14]

Fox's Cavuto: “We Were Lied To,” Sequester Was “Hardly The End Of The World.” On the May 8 edition of Fox News' Your World, host Neil Cavuto was joined by Fox Business analyst Charles Payne, Heritage Foundation chief economist Stephen Moore, and Democratic strategist Jessica Ehrlich to discuss the GAO report. Cavuto claimed that the report's findings show that budget sequestration was “hardly the end of the world” and repeatedly claimed “we were lied to” about the economic consequences of across-the-board budget cuts. [Fox News, Your World with Neil Cavuto, 5/8/14]

Fox's Hannity: Sequestration Warnings Were “More Government Lies.” On the May 8 edition of Fox News' Hannity, host Sean Hannity was joined by Fox contributors Stephen Hayes and Kirsten Powers to discuss the GAO report. Hannity described politicians warning of the consequences of budget cuts as “more government lies” while attempting to tie sequestration to alleged administration malfeasance regarding Benghazi, the IRS, and the Affordable Care Act. Hayes further argued that the GAO report showed that agencies had used every means necessary to meet budget restrictions “except for attritioning government workers,” a claim directly refuted by the GAO report he cites. [Fox News, Hannity, 5/8/14]

... Ignores The Great Cost Of Budget Sequestration

GAO Cites Employee Attrition, Lack Of New Hiring Under Sequestration. The GAO report details how the 23 affected federal agencies tried to meet the budget restrictions established by sequestration. It noted considerable attrition within agencies combined with hiring restrictions to “absorb sequestration's reductions”:

Many agencies strictly limited or froze hiring at the beginning of fiscal year 2013 or earlier, which helped them absorb sequestration's reductions. In some cases, agencies reported that hiring restrictions, along with the additional loss of federal employees through attrition, helped to minimize the size and scope of personnel actions, such as furloughs, needed to achieve the required budget reductions. [Government Accountability Office, March 2014]

Federal Agencies Relied On Employee Furloughs, Reduced Hours, Diminished Services To Meet Budget Obligations. The GAO report chronicles the significant reductions in worker compensation and public services caused by sequestration. Nutrition services for 142,000 low-income women and children were cut, as was rental assistance for 42,000 low-income families. Up to 60,000 homeless Americans lost access to housing and emergency shelter assistance. [Government Accountability Office, March 2014]

Federal Oversight And Monitoring Reduced. The GAO report showed that sequestration significantly reduced “oversight and monitoring activities” of federal agencies and inspectors general (IG). Auditing and review processes within the Social Security Administration (SSA), Department of Housing and Urban Development (HUD), Department of Energy (DOE), and Department of State were all reduced to meet budget constraints. [Government Accountability Office, March 2014]

Budget Limits “May Result In Forgone Revenue.” The GAO report detailed examples from the Internal Revenue Service (IRS) and Department of Interior in which budget restrictions “may result in forgone revenue.” For the IRS, the Treasury Department projects billions of dollars in lost revenue due to fewer tax fraud reviews. For Interior, the GAO reports that the department planned to issue hundreds fewer oil and gas leases for the production, sale, and distribution of domestic petroleum products:

Treasury estimates that reductions to the Internal Revenue Service (IRS) budget from sequestration will likely result in billions of dollars in lost revenue due to fewer tax return reviews and diminished fraud detection.

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Interior planning documents showed that approximately 300 fewer onshore oil and gas leases would be issued than originally planned in fiscal year 2013 due to sequestration. Issuance of fewer leases will likely delay prospective production and additional revenues for the federal government. Revenue generated from federal oil and gas production is a significant nontax source of federal government funds. [Government Accountability Office, March 2014]

Federal Employment Has Fallen Since Sequestration Went Into Effect

Federal Employment Down 80,000 Since Sequestration, Lowest Level Since 1966. According to data from the Federal Reserve Bank of St. Louis, the level of federal employment was approximately 2,708,000 as of April 2014. This represents the smallest federal workforce since July 1966, and marks a significant reduction of the federal workforce since sequestration went into effect in March 2013:

[Federal Reserve Bank of St. Louis, Economic Research, accessed 5/8/14]

Sequestration Has Cost The Economy Jobs

Sequestration Costing The Economy Up To 1.6 Million Jobs. According to a July 2013 letter from the Congressional Budget Office, reversing budget sequestration last year could have created or preserved up to 1.6 million jobs while adding up to 1.2 percent to economic growth over the same period. [Congressional Budget Office, 7/25/13]

Reversing Sequestration Could Add To Current Levels Of Growth. According to data from the Bureau of Labor Statistics (BLS), the economy has steadily added jobs every month since October 2010. For the past year, it has added jobs in spite of budget constraints imposed by sequestration that restrict growth and limit job creation. [Bureau of Labor Statistics, accessed 5/8/14]

CAP: Replacing “Mindless And Damaging Cuts” Should Be “Job Number One.” According to an October 2013 federal budget report by the Center for American Progress, replacing budget sequestration should be a top priority for members of Congress going forward:

Job number one, now that the government is reopened and the debt limit is raised, is to replace those mindless and damaging cuts with smarter, longer-term deficit reduction and implement some much-needed immediate investments in economic growth today. [Center for American Progress, 10/17/13]

Fox Has A History Of Downplaying Sequestration In Pursuit Of Deeper Cuts

Fox Supported Budget Sequestration, Blamed Obama For Its Effects. On the February 5, 2013, edition of Fox News' America Live, Fox's Chris Stirewalt attempted to blame President Obama for the inception of budget sequestration. [Fox News, America Live, 2/5/13 via Media Matters]

Fox's Baier Downplayed Impact Of Sequestration Cuts, Employee Furloughs. On the July 30, 2013, edition of Fox News' Special Report, host Bret Baier highlighted how federal agencies were still managing to reduce the number of expected furlough days due to sequestration. Baier called initial furlough projections from federal agencies “greatly exaggerated” and claimed that “dire sequester warnings have not come to fruition.” [Fox News, Special Report with Bret Baier, 7/30/13 via Media Matters]

Fox's Cavuto Claimed That Sequestration Was Not Impacting Job Creation. On the August 23, 2013, edition of Fox News' Your World, host Neil Cavuto claimed that positive job creation in the months since implementation signaled that sequestration was not impacting the job market. He further claimed that Treasury Secretary Jack Lew and Attorney General Eric Holder had “made ...up” the damaging effects of budget cuts on the economy.[Fox News, Your World with Neil Cavuto, 8/23/14 via Media Matters]