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Automatic spending cuts would bite more in 2014

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WASHINGTON (AP) -- The first year of automatic, across-the-board budget cuts didn't live up to the dire predictions from the Obama administration and others who warned of sweeping furloughs and big disruptions of government services. The second round just might.

Several federal agencies found lots of loose change that helped them through the automatic cuts in the 2013 budget year that ended Sept. 30, allowing them to minimize furloughs and maintain many services. Most of that money, however, has been spent.

The Pentagon used more than $5 billion in unspent money from previous years to ease its $39 billion budget cut. Furloughs originally scheduled for 11 days were cut back to six days. The Justice Department found more than $500 million in similar money that allowed agencies like the FBI to avoid furloughs altogether.

Finding replacement cuts is the priority of budget talks scheduled to resume this week, but many observers think the talks won't bear fruit. Agencies that have thus far withstood the harshest effects of the across-the-board cuts in 2013 are bracing for a second round of cuts that'll feel a lot worse than the first.

A drop in participation and lower-than-expected food prices allowed a widely supported food program for low-income pregnant women and children to get through this year without having to take away anyone's benefits. A second round of automatic sequestration cuts could mean some women with toddlers lose coverage next year.

To avert furloughing air traffic controllers and disrupting airline flights this year, Congress shifted $253 million in automatic cuts to airport construction funds. Those funds are needed to meet a requirement to install runway safety areas at all airports by 2015, so that pot of money won't be available to bail out controllers again.

Senate Appropriations Committee Chairwoman Barbara Mikulski, D-Md., said agency budget chiefs "squeezed everything to get through the first year thinking we would come to our senses."

However, most of those accounting maneuvers were one-time steps. The automatic spending cuts in 2014 promise to be far more painful

For the time being, Congress has frozen 2014 spending at 2013 sequestration levels while negotiators seek a budget deal that would ease some of the automatic cuts. Absent a deal, the spending "caps" on agency operating budgets will shrink by another $20 billion or so, with most of that money squeezed out of the Pentagon.

Nowhere will the effects be felt more than at the Justice Department, which pretty much skated through the automatic cuts in 2013.

"Justice had like half a billion dollars in unobligated balances and so they brought that back and that made it possible for them not to have any furloughs anywhere in the Justice Department, Bureau of Prisons or FBI or whatever," said Scott Lilly, a former top House Appropriations Committee aide. "But they've used that up so they're going to get hit much harder this year than they did last year."

The FBI already has suspended training of new agents and has instituted a hiring freeze.

"Quantico is quiet. I have no new agent classes going through there," new FBI Director James Comey said last month. "I can't afford it."

Without relief from Congress, Comey said the automatic spending cuts will require him to eliminate 3,000 positions. The FBI's 36,000 employees are facing unpaid furloughs of two weeks.

The situation will also worsen at the Pentagon, where the first round was no picnic, eroding combat readiness and grounding Air Force squadrons. Cuts in military training, maintenance and weapons purchases were deeper than average because the Pentagon was allowed to exempt military personnel accounts.

Gen. Raymond Odierno, the Army's chief of staff, testified last week that another round of sequestration-level cuts will prevent 85 percent of Army brigades from meeting readiness requirements for unanticipated deployments. The Navy will have to delay maintenance for 34 ships, costing private shipyards almost $1 billion worth of contracts, and the Air Force will have to cut flying hours by up to 15 percent, the Senate Armed Services Committee was told.

Because of $4 billion in prior-year funding, the Pentagon was able to maintain Navy and Air Force procurement in 2013. Without that money in 2014, the Pentagon will have to the delay the delivery of a new aircraft carrier and a nuclear submarine.

"We are consuming tomorrow's `seed corn' to feed today's requirements," Marine Corps Commandant Gen. James Amos told the Senate Armed Services Committee.

"We might as well shut down the Pentagon," said House Armed Services Committee Chairman Howard "Buck" McKeon, R-Calif. "You'd better hope we never have a war again."

The automatic spending cuts' impact has been slow to kick in in many instances because it typically takes months or more from the time spending is approved until the money is actually disbursed by the government. Also, some 2013 spending, like special education and Title I aid to schools, is doled out

around the Sept. 30 end of the budget year, so those cuts are just taking effect now.

Accounts for housing vouchers for the poor took a hit in 2013, but most local housing agencies had previously appropriated but unspent money in reserve. Few, if any, families already getting vouchers lost them. Instead, people on waiting lists seeking vouchers just didn't get them.

The Center on Budget and Policy Priorities, a liberal think tank and advocacy group for the poor, calculated that 40,000 to 65,000 fewer families will have vouchers by the end of this year than at the end of 2012. By the end of 2014, between 125,000 and 185,000 fewer families would have vouchers if the automatic spending cuts stay in place unchanged, the center said, and that could mean some families might lose their apartments.

The Commodities Futures Trading Commission, charged with new and complex policing responsibility of the over-the-counter derivatives market under the 2010 overhaul of Wall St. regulations, managed to make it through 2013 without furloughs. But CFTC Chairman Gary Gensler warned agency employees last month that they face up to 14 unpaid furlough days next year.

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