Shelby: Sequestration is No Solution to Our Spending Problem

For Immediate Release: February 14, 2013
Shelby: Sequestration is No Solution to Our Spending Problem

U.S. Senator Richard Shelby (R-Ala.), ranking Republican on the Committee on Appropriations, today made the following statement at a hearing to examine the impacts of sequestration:


"Thank you, Madam Chair. I look forward to working with you on the important issues before this Committee.

"Today, we will hear from our witnesses on the impacts of the sequester, which is appropriate and timely because the cuts are poised to take effect in just 15 days. It should be noted, however, that the sequester is something that the Congress and the President set in motion, knowing full well that this day could come.

"The sequester will bring spending cuts that are automatic and across-the-board for most discretionary accounts. A rigid formula will determine how cuts are made, instead of what's best for economic growth, safety and prosperity. Cuts will happen without regard to a program's merit or efficacy. Some of the most severe cuts will hit defense programs.

"Although we must reduce spending, it should be done in a deliberate way. This is why I opposed the bill that created the sequester in the first place. The sequester was supposed to be a last resort if the so-called Super Committee failed to agree upon measures to reduce the deficit. In the end, the Super Committee reached an impasse. It did not produce even a penny of deficit reductions.

"It's been over one year since the Super Committee's failure. Although we have seen the sequester coming, we haven?t taken any steps to fix it. In fact, Congress has only delayed it further. This situation presents a perfect opportunity for the President to exercise some leadership. Although he has called on Congress to act, he has not put forward a proposal of his own with specific options.

"Also, when I hear the President and some Members of Congress say that the solution must include raising taxes further, I question their seriousness in fixing the overall problem. As CBO's latest analysis shows, we do not have a revenue problem, we have a spending problem. Revenues are already on a path to increase and return to levels that are in line with their historical average of 18 to 19 percent of GDP.

"In contrast, government spending remains high during the next decade and is expected to

grow beyond its 40-year average. This will occur even with the discretionary spending caps and sequester put in place by the Budget Control Act. In fact, under current law, CBO estimates that discretionary spending will fall by more than 3 percentage points below its historical average.

"The real driver of our debt is not discretionary spending, but entitlement spending. As CBO reports, the combination of an aging population, rising health care costs, and an expansion of health insurance subsidies will drive up the cost of mandatory programs. Absent reform of entitlements, this will lead to an unstoppable debt spiral.

"The issue is only compounded by the cost of servicing our debt, which will rise from about $220 billion in 2012 to over $850 billion in 2023. By then, interest payments will equal 60 percent of our discretionary budget. This growing indebtedness, as CBO states, poses an increased risk of precipitating a fiscal crisis.

"The warning signs that we are moving towards a fiscal meltdown have been in place for some time. Unfortunately, Congress has repeatedly failed to heed these signs. It has been years since Congress has even had a regular-order budget process with appropriations measures agreed upon by both Chambers. Instead, important decisions on spending and taxes happen at the eleventh hour behind closed doors. The American public deserves a transparent and accountable budget process that restores fiscal order.

"Sequestration should not be a part of the process. It certainly is no long-term solution to our spending problem. But, it should be a cautionary tale for Congress. The sequester we face today is the tip of the iceberg compared to the austerity measures that will be necessary in the future if Congress does not act soon on comprehensive fiscal reform. Comprehensive reform must include both tax reform and spending cuts. One without the other is only a partial solution.

"In his State of the Union Address the President reiterated what appears to be his goal of $4 trillion in deficit reduction over ten years. That number alone sounds staggering. But, when it is compared with our actual long-term unfunded obligations, $4 trillion barely scratches the surface.

"It is common practice in Washington when faced with an overwhelming problem to define it down and then declare victory while pursuing half-measures. That is why I am concerned that the debate surrounding the sequester will become a diversion from the very real problem facing us. The time for partial and temporary solutions is long past. What we need now is a collective acknowledgment of the problem and a comprehensive joint effort to reach a long-term solution. Anything short of that will inevitably place the American economy on an irreversible downward glide path.

"Today, we will hear about the dire consequences of the impending cuts. I do not doubt that they will be painful to bear for many agencies across the federal government. If there is a way to mitigate the pain while we continue to enforce fiscal discipline, I am open to discussing it. But, I believe that it is important to reemphasize that the sequester and whatever temporary solution we may devise is just a precursor to the main event."