Sequester: The Only Game Now in DC

February 25, 2013 11:43 PM

via a special arrangement with Informa Economics, Inc.

While few see the end zone at this time, some see linkage to March 27 end of CR

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

It looks like two fiscal cliffs are intertwined relative to the March 1 start of across-the-board spending reductions (sequestration) if Congress, as is unlikely, does not come up with an alternative approach. But the March 1 "deadline" is a false one because it will take around early April for any substantial impacts to be felt. It is increasingly looking like the March 1 sequester "deadline" is being linked with the March 27 deadline for the current resolution (CR) funding most of the US government.

And, Senate Democrats and Republicans are putting forward proposals that could be the foundation of a future deal to replace the automatic spending cuts likely to take effect Friday. Senate leaders this week will vote on several sequester replacement packages from both political parties that will likely have some ingredients for the eventual compromise package.

That is not stopping the White House, including President Obama and a few Cabinet member (those heading Transportation and USDA) from playing the political game of dire warnings. Some observers say the Obama administration may ratchet up the pressure by front-loading the effects of the sequester during the month of March, to make sure there is enough pain that impacts the public and to pressure the GOP to negotiate by month’s end.

The White House effort to play up the dramatic effects of the scheduled across-the-board cuts was evident on Feb. 22, with Transportation Secretary Ray LaHood appearing at a White House press briefing. "What I’m trying to do is wake up members of Congress on the Republican side," LaHood said. "As a former [GOP] member of Congress of 14 years, I urge my former colleagues to address this issue when they get back next Monday and to work on a long-term, balanced solution to our deficit challenges." LaHood said that as part of $600 billion in cuts to the Federal Aviation Administration’s Fiscal 2013 budget, 100 air traffic control facilities at smaller airports would close, midnight shifts at 60 other towers would end and the "vast majority" of the FAA’s 47,000 employees would be furloughed one day per pay period. Many expect similarly dramatic proclamations from agencies and departments in the days and weeks ahead, especially as congressional committee heads demand more answers about where cuts will be made to satisfy the law.

The White House began a week of warnings about the sequestration by issuing reports Sunday on how the looming $85 billion in automatic budget cuts will affect each of the 50 states. Among the examples: A slowdown of Superstorm Sandy cleanup in New Jersey, teacher layoffs in Ohio, reduced ship maintenance in Virginia, fewer vaccinations in Georgia, military base cutbacks in Texas and California, and similar reductions in states across the country. And, President Obama's schedule this week includes a Tuesday visit to shipyards in Newport News, Va. According to the Washington Post , "The Washington area would be hit hard," with "nearly 150,000 civilian Defense Department personnel in the area...partially furloughed through Sept. 30 - with a total average reduction in pay of $7,500."

Still, the Washington blame-game on who will be to blame for any sequester startup is at full throttle, despite the dismay by many voters outside the nation's capital.

The Senate Democratic plan would replace one year of the sequester, or $110 billion of cuts, with a 50-50 split of targeted cuts and new revenue. That includes eliminating direct payments to farmers — a provision that major farm and commodity groups argued against in a letter sent last week to Senate Majority Leader Harry Reid (D-Nev.). Some observers say that Senate Ag Chairwoman Debbie Stabenow (D-Mich.), who supports delinking the direct payments from the farm bill debate, overreached in this area.

Senate Minority Leader Mitch McConnell (R-Ky.) already eliminated the farm program direct payment provision from legislation during the fiscal cliff debate, and sources say he does not support such a measure now.

Republicans will also have their alternative plan to avoid the sequester. It would give the president the authority to reapportion the prescribed cuts as long as he hit the same top lines and did not shift the ratio of defense-to-nondefense cuts.

"The compromise is to give the president authority that he should be willing to use as the leader of the country to target the cuts rather than to take the cuts on every line item," GOP Conference Vice Chairman Roy Blunt (R-Mo.) said Feb. 21. "These spending cuts are going to occur, and they should occur, and they should be done in the right way instead of the wrong way."

Neither plan will clear the entire Congress, but as is typical of recent Congresses, any votes will allow each party to restate their positions before more intensive negotiations begin on an agreement that can make it to the president’s desk. As previously noted, any deal would likely be attached to a new CR to replace the current stopgap measure that expires March 27.

House Republican leaders have made it clear that they will not consider any sequester replacement plan until the Senate acts, adding that the House passed two sequester substitutes last year that would have replaced the automatic cuts in defense agencies, largely by making deeper cuts in entitlement spending.

Meanwhile, the White House opened the door Friday to a deal that would require $2 in spending cuts for every $1 in revenue for a sequester replacement bill and did not rule out a plan that would avert the sequester for as little as two months. "Whatever the ratio is in the bill, I would point you to the president’s overall approach to this, which has been $2 in spending cuts to $1 in revenue," White House spokesman Jay Carney said. Carney said the White House wants the House and the Senate to pass a bill that would avert the sequester in a balanced way next week, and he noted that the fiscal cliff deal averted the sequester for two months. "It could be that" again, Carney said.

But the GOP continues to stick to its demand for an all-cuts alternative. However, Sen. Lindsey Graham (R-S.C.), worried about impending defense budget cuts, has diverged from the GOP party line by saying he would be willing to raise $600 billion in new tax revenue if Democrats would accept major entitlement reforms in a big deficit-reduction package. Speaking in an interview on CNN, Graham said he expected to talk to President Barack Obama about the idea today at the White House. Graham and Sen. John McCain (R-Ariz.) have been invited to meet with Obama at the White House to discuss immigration reform.


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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