The Sequestration Amount Was Never Really a Spending Cut

Washington sold the public a story of shared sacrifice and automatic austerity. The truth is far less noble. The sequestration amount was never a real reduction in federal spending. It was a smaller planned increase, measured against a fictitious budget baseline that assumes government grows forever. If you understand that single distinction, you understand why the debt keeps exploding, why every historic budget deal never seems to reduce anything, and why the federal government is larger today than it was before the sequester ever took effect.

The number most people remember is one point two trillion dollars in cuts over nine years. That sounds like Washington finally tightening its belt. But the actual mechanics of sequestration reveal a budgeting trick so routine that hardly anyone noticed it.

How Washington redefined the word cut

Sequestration came out of the Budget Control Act of 2011. When the joint select committee, the so-called supercommittee, failed to produce a deficit reduction plan, the law triggered automatic spending reductions. The first year's sequester, in 2013, was roughly eighty-five billion dollars, split between defense and nondefense accounts. Over the full period, the advertised number was about one point two trillion dollars.

That sounds like spending was going to fall. It did not. In federal budgeting, a cut rarely means spending less than the government spent the year before. It means spending less than the Congressional Budget Office projected the government would spend in the future.

That distinction is everything.

The CBO baseline assumes automatic growth: inflation, population increases, rising health-care costs, and the built-in expansion of programs already on the books. Then Congress cuts from that inflated projection. The result is not a smaller government. The result is a government that grows more slowly than the central planners had hoped.

Here is the plain-English version. Suppose a family spent ninety thousand dollars last year. It plans to spend one hundred thousand dollars this year. Then it announces a five thousand dollar cut and spends ninety-five thousand dollars. The family has not reduced its spending. It has increased spending by five thousand dollars while claiming fiscal discipline. That is exactly how Washington accounts for the sequestration amount.

This is not merely an accounting quirk. It is the entire game.

Look at the actual dollars, not the press release

The federal budget numbers tell the story clearly.

In fiscal year 2011, total federal outlays were about three point six trillion dollars. By fiscal year 2019, before the COVID spending surge, total outlays had risen to about four point four trillion dollars. That is roughly eight hundred forty billion dollars more in annual spending over the very period we were told Washington was being starved by the sequester.

Even in 2013, the first year of the sequester, the modest nominal decline in total outlays came from an elevated post-stimulus baseline, and spending resumed its climb almost immediately. The overall trajectory never changed. Government did not shrink. It grew.

The first-year sequester amount of roughly eighty-five billion dollars was real money by any normal standard. But it represented about two and a half percent of that year's federal spending. The federal government did not get smaller. The entitlement state did not stop growing. The interest on the debt did not pause. The administrative state kept humming.

This is exactly the error Henry Hazlitt warned about in Economics in One Lesson. There is the seen effect, the advertised cut. And there is the unseen effect, the baseline increase, the continued growth of mandatory spending, the future taxes and borrowing required to finance it, and the private capital crowded out of the productive economy. The sequester fighters saw the eighty-five billion dollars. They did not see the hundreds of billions in future growth hidden inside the baseline.

Sequestration was an admission of congressional failure

There is another angle to the sequestration amount that deserves more attention than it ever received. Across-the-board cuts are not an act of fiscal discipline. They are an admission that Congress cannot govern.

The Constitution is explicit about who holds the power of the purse. Article One, Section Nine says that no money shall be drawn from the Treasury but in consequence of appropriations made by law. That clause does not create a supercommittee. It does not delegate spending decisions to an automatic formula. It places the responsibility on elected representatives to set priorities, make trade-offs, and answer to the voters for them.

Sequestration was Congress outsourcing its job because it lacked the courage to choose. Rather than cut failing programs and protect essential functions, Congress cut everything by the same percentage. That is not constitutional government. That is rule by arithmetic.

Friedrich Hayek's knowledge problem usually applies to central planners trying to run an economy from a single office. But Congress is not supposed to be a central planner for the whole economy. It is supposed to make a limited number of public spending decisions under the Constitution. When it applies a mechanical formula to every account, it confesses that it cannot even prioritize among its own functions.

That is why the defense cuts were so damaging. America did not need arbitrary defense reductions tied to the failure of a supercommittee. It needed a government willing to say no to the real drivers of the debt: Social Security, Medicare, Medicaid, and interest on a thirty-six trillion dollar national debt. Instead, defense and a narrow slice of domestic discretionary programs absorbed the political pain while the entitlement state stayed on autopilot.

The Founders did not design the spending power as a machine that runs itself. The Federalist Papers describe the power of the purse as one of the most complete and effectual weapons given to the people's representatives. That weapon requires judgment. Sequestration replaced judgment with a percentage.

The real problem was never the sequester amount

The problem is not that sequestration was too small, though it was. The problem is that it was measured against a fake baseline, applied to a small part of the budget, and then marketed as fiscal restraint.

Mandatory spending and interest on the debt make up more than two-thirds of federal outlays. Sequestration largely ignored them. Social Security was left alone. Medicaid was left alone. Interest on the debt was left alone. A superficial trim to Medicare provider payments was roughly the limit of the courage on display.

When you squeeze only the discretionary slice while the entitlement state grows on autopilot, total government still grows. That is not a trade-off. That is a dodge.

Thomas Sowell's signature warning applies here: judge policies by results, not by labels. The label was automatic spending cuts. The result was higher spending over the decade. By any honest measure, that is a failed policy dressed up as a victory. Sequestration did not restrain the federal government. It gave elected officials a rhetorical shield while the spending machine kept running.

A real budget is a set of priorities

The way back is not another sequester. It is a real budget process.

A real budget starts with the principle that government exists to do a few things, do them within its enumerated powers, and leave the rest to free people. It sets actual dollar limits, not reductions from an imaginary future. It reforms the programs that drive long-term debt. It accounts honestly for interest. And it treats the word no as a complete sentence.

That requires something sequestration never required: elected representatives willing to be held accountable for choices. Cutting defense because the supercommittee failed is not a choice. It is an escape hatch. Saying no to endless entitlement expansion is a choice, and it is the only choice that matters if the goal is actually limiting government.

The sequestration amount should be remembered not as an act of austerity, but as a case study in how Washington uses baselines to turn increases into cuts. If your definition of savings is spending less than a projection, then you can claim a cut while spending more nearly every year. That is exactly what happened.

The ordinary American pays for this game in three ways: higher taxes, higher prices, and less economic freedom. A government that spends more each year, even when it claims to be cutting, is consuming the private capital that creates jobs, builds families, and preserves liberty.

Real fiscal discipline does not require a formula. It requires elected representatives who are willing to say what the Constitution already implies: much of what Washington is doing should not be done at all. Until that changes, every new cut will continue to be a smaller planned increase, and every budget fight will end the same way, with a larger, more expensive, less accountable government.