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The Fiscal Cliff Isn’t Over Yet

After days of back and forth, amidst widespread panic and flaring tempers, a middle-of-the-night vote staved off the worst of the fiscal crisis. Now, like with the suffix “-gate,” most people — even within the Beltway, where political intrigue is daily bread — are ready to move toward horizontal vocabularies. The Cliff, in other words, is behind us.

Unfortunately, it’s not. As Congress left it, in the next fiscal year, there will be an 8.5 percent cut across all federal agencies. This sequestration doesn’t discriminate according to results, meaning that efficient (read: actually functional programs) will lose the same amount that inefficient (read: primarily politically well-connected) programs will lose. These budgets are a zero-sum game as far as public services are concerned; with finite resources, the more spent in one area, the less spent in others. But rather than delegating the remaining resources to the most functional, this across-the-board approach prevents prioritizing, reducing all budgets equally.

In a round table discussion hosted by the U.N. Foundation last week, Daniel Stid, a partner of The Bridgespan Group, argued that this will lead to a dramatic overall decrease in delivered results on all levels of government. In a report recently released by Bridgespan, an anonymous state budget director is quoted as saying that after such cuts, “[Y]ou end up doing everything worse, rather than doing some things very well.”

Non-profits often get a bad rap for inefficiency — it’s hard to muster too much sympathy with Grandma Anne’s Save Wisconsin’s Gray Squirrels Group losing funding. But what many people don’t realize is that the federal government actually outsources many essential functions to non-profits. In very real terms, the Urban Institute calculated that in 2009, the federal government spent over $100 billion dollars on contracts with non-profits, with the vast majority going to health and human services, especially in impoverished communities.

What’s concerning now, explained Stid, is that these non-profits, already struggling with rising costs of operation since the Recession, may not survive sequestration – with potentially devastating effects on the communities least equipped to handle their loss.


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