Last month, D.C. Mayor Vincent Gray came forward with an announcement thousands of city officials across the nation wish they could make themselves. The District had accrued a $417 million surplus in fiscal year 2012, and has put it all away in its emergency fund. This brings its rainy day savings to almost $1.5 billion.
While many progressives would have liked the funds to go toward education or low-cost housing in the city, the mayor’s hands are tied by a law he helped pass during his time on the D.C. Council. In 2010, he shepherded a bill through the Council requiring any budget surpluses to be fully contributed to the emergency fund in hopes of shoring up the city’s credit score and preventing any possible return of direct federal control of District finances. While such a stringent rule may seem foolhardy to some, the decision to save this year’s entire surplus is a good one, for that rainy day might be just around the corner.
If it comes to pass, the District will be hit particularly hard by the deep, automatic cuts in domestic federal spending dubbed the sequestration by Congress and the media. The White House estimates the austerity measures would eliminate funding in D.C. for over 200 Head Start students, cut 500 federal college scholarships and 510 federal work-study jobs for D.C. residents, and reduce environmental funding for clean air and water by $1 million a year, along with a slew of other cuts ranging from school nutrition programs to childhood vaccines and military readiness. Thanks to the foresight of the D.C. Council, the District has the emergency funding to deal with sequestration, at least until Congress presumably restores funding to the programs as a part of a larger debt agreement.
The problem is, few cities, or even states , have this luxury. They instead will be left to take the brunt of the sequester on the chin, which will hurt both the economy and the health and well-being of their citizens. The entire state of Michigan, for instance, has an emergency fund of just $365 million, less than the District’s surplus this year.
Virtually everyone agrees the sequester should not happen. Devised not as policy but rather a point of leverage to beget a larger debt deal, it was explicitly constructed as a set of cuts so irresponsible it would be unthinkable to implement them. Given that many economists have warned our members of Congress this blunder could push us back into recession, there is no reason for them not to simply eliminate the cuts. After all, it’s silly to push for austerity of any kind when unemployment is still elevated, growth is still sputtering, and the American government’s borrowing costs remain at historical lows. If Congress and President Barack Obama finally come to their senses, they’ll write the sequester out of history and shift their focus from the fear-mongering of the debt debate to jobs and economic prosperity for the American people.
