Note: This story was provided exclusively to our e-newsletter subscribers back on September 16. It was published for all readers on November 9.
Preliminary estimates released by the White House last Friday indicate funding for highways, transit and rail programs in 2013 will be cut by about $1.5 billion on January 2 if automatic budget cuts take place as scheduled. Shrinking or preventing those cuts requires Congress and the White House to strike a budget deal. But Congress certainly won’t come up with a fix before the election, and there’s widespread pessimism about reaching an agreement by January 2.
The automatic cuts, known as “sequestration” in DC lingo, are a result of the inability of the White House and Congress to reach a budget deal back in 2011. Sequestration was included as an incentive to reach a budget deal; sequestration was so distasteful to both parties that it was expected to force a deal. It didn’t, and now time is running out to prevent the cuts.
The report, required by Congress, details spending cuts in all areas of government. It is 224 pages and can be downloaded from the White House here. The transportation sections begin on page 144.
The report was highly anticipated by transportation stakeholders. Highway programs were expected to be mostly protected from the cuts, because the relevant law exempted programs funded through trust funds. While the Administration was given no leeway in determining which programs would be cut, or by how much, some people believed a quirk in the law allowed the White House to apply the cuts to transportation programs, if it would so decide.
The report was expected to confirm whether the White House’s interpretation of sequestration would include or exclude the exempted transportation programs. It would also detail more precisely, down to sub-program level, how the cuts would be administered.
Now we know: the trust-fund transportation programs will be exempted from the cuts. The non-exempt transportation programs will be subjected to a 7.6 to 8.2% cut, depending on the program.
However the general fund transfer that supplements the highway trust fund is subject to the automatic cuts, as is a portion of highway contract authority. Also note the cuts would occur when the fiscal year is already a quarter over. Implementing a 7% to 8% cut that deep into the budget year will make things even more difficult.
Here are the White House’s preliminary estimates for funding reductions, but note this is all subject to change, whether or not Congress acts before January 2.
Federal Highways: $673 million
$471 million of General Fund transfer to Highway Trust Fund
$56 million from the roughly $700 million of annual highway contract authority that is typically exempt from the obligation limitation)
$136 million from Emergency Relief Program
TIGER: $41 million (of the $500 million total)
Federal Transit: $176 million
$156 million from Capital Grants
$8 million from Administrative
$12 million from Wash. Metropolitan Transit Authority
Amtrak: $131 million
$38 million from operations
$78 million from capital grants
$15 million from safety & operations
Federal Rail: $3 million
$3 million from Research and Development
Federal Aviation: $1,051 million
$377 million from operations
$415 million from Airport and Airway Trust Fund
$229 million from Facilities and Equipment
$14 million from Research, Engineering and Development
$4 million from Essential Air Service, Rural Airport Improvement Fund
$12 million from Payments to Air Carriers
Nat’l Highway Traffic Administration: $11 million
$11 million from Operations and Research
Maritime Administration: $41 million
$17 million from Security Program
$13 million from Operations and Training
$10 million from Ocean Freight Differential
$1 million from Assistance to Small Shipyards
The Coast Guard would lose about $577 million total from operations, acquisitions and other programs.
USDOT’s Office of Inspector General would lose about $7 million.
USDOT Salaries and Expenses would be cut by $8 million.
Transportation Security Administration cuts total around $508 million.
Government-wide, the automatic cuts are projected to total $1.2 trillion divided evenly across nine years. The cuts are also evenly split between defense spending (except spending on wars) and discretionary domestic spending (except for only “minor” cuts to Social Security and Medicaid).
On the issue of more precise, sub-program cuts, the White House’s report is of little use. The National Journal noted, in “White House Cranks Up Pressure with Stark, But Vague, Sequester Report“:
”When the much-anticipated White House report landed in inboxes on Friday afternoon, budget watchers were anxious to pore through the 400 pages detailing more than 1,200 budget accounts to understand just how painful sequestration might be next year.
No such luck. With roughly two months before Congress heads into a lame-duck session, the White House instead opted to crank up the pressure on Congress by providing few new details on the ramifications of sequestration.”
Sequestration is bad policy and no way to run a government. It cuts as much spending from critical, effective programs as it does from non-critical, ineffective programs.
Learn more from our past story: “Deep Funding Cuts Scheduled for Popular Transit Program, Amtrak, and Aviation Programs”
“You Ask, We Answer: Sequestration and the Pentagon, National Priorities Project
From the Bipartisan Policy Center:
- The 2013 Sequester May Not Be What You Think, January 2012
- Three Reasons Why $1.2 Trillion Isn’t Really $1.2 Trillion, January 2012