Unless Congress and President Obama reach agreement before Friday, about $85 billion in poorly designed spending cuts for Fiscal Year 2013 will begin hitting a broad cross-section of programs across the federal government.
The Concord Coalition supports replacing these automatic cuts with a targeted proposal that makes fiscally responsible trade-offs between specific revenue and spending priorities. Concord Co-Chair Sam Nunn last week called the sequester “misdirected and ill-timed” and urged lawmakers to replace it using the fiscal framework recently proposed by Erskine Bowles and Alan Simpson.
The automatic cuts (or sequester) are the result of the Budget Control Act’s requirement to achieve an additional $1.2 trillion in deficit reduction over 10 years. The cuts were originally scheduled to take effect in January but the “fiscal cliff” agreement delayed them two months. The cuts will be evenly divided between defense and non-defense spending.
In recent days federal agencies have begun detailing the expected impact of the sequester, and members of both parties have continued to make partisan speeches blaming each other for the cuts. No significant progress appears to have been made in reaching a compromise, and many policymakers have suggested that the cuts are likely to go into effect.
Obama and most congressional Democrats support replacing the cuts with a combination of revenue increases and spending cuts. Most Republicans oppose any additional revenue increases, and House Speaker John Boehner has called for spending cuts sufficient to balance the budget over 10 years.
This week the Senate is scheduled to vote on Democratic and Republican proposals to address the cuts. The Democratic proposal would replace the cuts through next January with $110 billion in revenue increases and spending cuts -- including increased taxes on wealthy individuals and corporations, as well as cuts to defense and agriculture spending.
Senate Republicans have not publicly released their proposal yet, though it is expected to provide federal agencies with increased flexibility in implementing the cuts.
Over the next several weeks, policymakers will also need to decide how to address the continuing resolution that is currently funding federal agencies at levels included in the Budget Control Act. If no agreement is reached before the resolution expires on March 27, a government shutdown will occur.