With the automatic spending cuts required by the Budget Control Act (BCA) scheduled to begin taking effect next week, both parties have continued to make partisan speeches while making no apparent progress on a potential compromise.
The BCA required total cuts of $1.2 trillion over 10 years that were originally scheduled to begin taking effect last month. The “fiscal cliff” agreement signed into law by President Obama in January delayed the cuts for two months and reduced them by $24 billion. If policymakers do not act prior to March 1, the Congressional Budget Office estimates that the cuts will now total $85 billion in 2013.
In a speech yesterday, Obama raised concerns about the impact that the cuts would have on priorities such as jobs, emergency responders, military readiness and investments in education, energy, and medical research. If a budget agreement is not reached before the cuts are scheduled to go into effect, Obama said, Congress should pass a smaller package of spending cuts and tax reforms to prevent the automatic cuts and allow additional time to reach a broader agreement.
In response, House Speaker John Boehner agreed that the sequester is the “wrong way to cut spending” but also said that replacing it “will require a plan to cut spending that will put us on the path to a budget that is balanced in 10 years.”
Senate Democrats last week unveiled a proposal to replace the automatic cuts through Jan. 2, 2014 with $110 billion in revenue increases and spending cuts. The proposal includes $55 billion in increased taxes on wealthy individuals and corporations, $27.5 billion in defense cuts phased in through 2021, and $27.5 billion in cuts to domestic spending programs such as agriculture subsidies.
Prior to this week’s recess, the Senate reached an agreement to consider both the Democratic proposal and a proposal by Senate Republicans during the week of Feb. 25. Senate Republicans have yet to publicly release details of their proposal.
Also last week, the Senate Appropriations Committee heard testimony from agency officials on the specific effects that the automatic cuts would have on their budgets.
The Concord Coalition supports replacing the automatic cuts with a targeted proposal that makes fiscally responsible trade-offs between specific revenue and spending priorities. Concord Co-Chair Sam Nunn this week called the sequester “misdirected and ill-timed” and urged lawmakers to replace it using the framework proposed this week by Erskine Bowles and Alan Simpson.