One of the most vexing questions of sequestration is this: Do President Obama and cabinet heads have the leeway to shape budget cuts so that they will inflict a minimum of pain, or do the president and his aides, as the White House claims, have so little flexibility in the matter that they can only stand by while devastating cuts take effect?
The remarkable thing about the current debate is that few people know the answer, or even whether there really is a clear answer. But a good case can be made that the president has more authority than he has acknowledged. Cabinet heads might well have considerable leeway to move money around to minimize the effects of cuts, and at the very least could do so after asking Congress for permission (which would likely be quickly granted).
Obama has claimed he is virtually powerless to stop cuts that the administration says will undermine U.S. national security, lower the nation’s defense against terrorism, devastate education and the environment, and make airline travel an even more difficult experience than it is today, among other ill effects. But is that really true?
In the past few days, I have talked to a range of people involved in the sequestration fight, from senior lawmakers to junior aides, and none is completely sure. “I actually don’t know,” said one Republican lawmaker who has spoken out on sequestration. “We’re trying to figure this out and get a real answer.”
But one person who has some insight into the problem is a plugged-in GOP aide who has experience both on Capitol Hill and in the executive branch. And, while noting that sequestration calls for cuts in all parts of the affected areas of government (discretionary spending — not the big entitlement programs), the aide notes that current law gives department heads a good deal of flexibility in spending their money. In an analysis of the situation, the aide says the best place to begin is to look at the “accounts” that make up the budgets of federal departments.
“Budget accounts can be large (National Institutes of Health, $40 billion, is one account) or small (double digit millions), but, typically they are large enough to comfortably move money around if unforeseen events occur — as they frequently do,” writes the aide.
“Three questions are of interest in this circumstance: Do the proportional cuts need to be made at a more detailed level than the account level? Can agencies still reprogram funds within accounts? And can agencies that have transfer authority still transfer funds?”
On the first question, the aide notes that sequestration calls for the reductions to be made “at the ‘programs, projects and activities’ level (so-called PPAs). The original  sequester law provides some direction as to how to define PPAs. But there is some question as to whether this direction needs to be followed because we are already well into the fiscal year. In the end, the Office of Management and Budget and the agencies often get to decide what the PPAs are. Here is how the GAO defines it in their budget glossary:
Program, Project, or Activity (PPA): An element within a budget account. For annually appropriated accounts, the Office of Management and Budget (OMB) and agencies identify PPAs by reference to committee reports and budget justifications; for permanent appropriations, OMB and agencies identify PPAs by the program and financing schedules that the President provides in the “Detailed Budget Estimates” in the budget submission for the relevant fiscal year. Program activity structures are intended to provide a meaningful representation of the operations financed by a specific budget account-usually by project, activity, or organization.
The aide continues: “Thus, a PPA can be as big as a budget account or much smaller than that – but it can be argued that this is at OMB’s discretion. In the last sequester I recall (Bush 41) the White House tried to define PPAs as small as possible because they were concerned the Democrats who controlled Congress would attack them for using their discretion to favor some activities over others. They called it the ‘Chubby Checker’ rule: How low can you go? In other words they did not want to be seen to be exercising any judgment. This White House also appears to be going small, but for a different reason.”
The second point, from the aide: “Even if OMB decides it must define PPAs very specifically, there is an action called ‘reprogramming’ that allows agencies to move money around within an account contrary to how it was appropriated. It is a common occurrence and many agencies do it. It typically requires a notification (letter) to the appropriators and/or authorizing committees. [In the past], for instance, the Corps of Engineers moved money around for different water projects all the time based on construction schedules, changes in designs, etc. Sometimes these notifications need to be approved by a committee in Congress and usually they just go into effect if Congress doesn’t object within a set period of time. I do not know of anything in budget law that precludes agencies from reprogramming funds after a sequester takes place. That is, if the Department of Transportation is concerned about furloughing controllers, they should be able to request a reprogramming from another part of the appropriations account — and they could do that right now. By the way, here is how GAO defines reprogramming:
Reprogramming: Shifting funds within an appropriation or fund account to use them for purposes other than those contemplated at the time of appropriation; it is the shifting of funds from one object class to another within an appropriation or from one program activity to another. While a transfer of funds involves shifting funds from one account to another, reprogramming involves shifting funds within an account. Generally agencies may shift funds within an appropriation or fund account as part of their duty to manage their funds. Unlike transfers, agencies may reprogram without additional statutory authority. Nevertheless, reprogramming often involves some form of notification to the congressional appropriations committees, authorizing committees, or both. Sometimes committee oversight of reprogramming actions is prescribed by statute and requires formal notification of one or more committees before a reprogramming action may be implemented.”
The third point, from the aide: “Republicans have been talking about giving agencies broad transfer authority as a way to manage the cuts. But the fact is some agencies already have such authority. I do not know all the agencies that currently have some form of transfer authority, but I know the Department of Defense does. In contrast to reprogramming funds within an account, agencies with specific or general transfer authority in law can request to transfer funds across accounts. This requires the agency to go through more hoops, but, again, it is not uncommon and I do not know of anything that precludes agencies that have such authority from making these requests after a sequester takes place. Here is how GAO defines transfer:
Transfer: Shifting of all or part of the budget authority in one appropriation or fund account to another. Agencies may transfer budget authority only as specifically authorized by law.
Judging from this analysis, it appears the administration has far more flexibility than it has claimed in dealing with sequestration. It also appears that much pain could be avoided even if Congress does not pass a measure giving Obama more authority to direct the cuts. The problem, of course, is that it is in the president’s political interest for the cuts to be as painful as possible, so he can blame Republicans for them. In this case, Barack Obama’s political interest and the well being of the American people are not at all the same thing.