Sequester Frustration

Overt political jockeying early last week gave way later to concrete warnings about job losses — a less overt form of political jockeying — just days ahead of the first round of automaticspending» «cuts» scheduled under the fiscal cliff legislation. The end result of a week’s worth of posturing, however, was no visible progress on replacing the automatic «cuts» with something more targeted, and seven more days closer to the March 1 deadline.

At this point, all concerned parties seem to agree that nothing will happen legislatively before the deadline. Whether anything happens after, most likely as part of maneuvers over a «spending» bill to replace the continuing resolution (PL 112-175) that is financing the government until March 27, is up «for» grabs.

When President Barack Obama returned to the White House on Feb. 19 after a weekend in Florida playing golf with Tiger Woods, he attacked Republicans in Congress, with a photo-op backdrop of first-responders in tow to help illustrate his point.

“These «cuts» are not smart. They are not fair. They will hurt our economy,” Obama said. He warned that every FBI agent would be furloughed and that border patrol agents would have their hours «cut» back, among myriad other «cuts».

Obama laid out the choice «for» Republicans as agreeing to the Democrats’ proposal «for»a different set of «cuts» combined with an additional tax increase following the one (PL 112-240) he signed into law in January, or owning any damage the sequester might cause to the economy.

House Speaker John A. Boehner said that Obama still hasn’t offered a “credible «plan» that can pass Congress” and that the debate over «revenue» “is now closed” after the fiscal-cliff deal. The Ohio Republican said his party wants to make changes to the tax code, too, but as part of a broader overhaul, with the resulting «revenue» used to reduce rates. “It should not be squandered to enable more Washington «spending».”

Republicans have repeatedly said that the White House first suggested the sequester, and that Obama signed it into law (PL 112-25), making his claims of clean hands on the automatic«cuts» disingenuous.

And Democrats have argued that both parties viewed the sequester more as a spur to action than as a policy that should actually go into effect.

But the two sides have never come close to being able to agree on how to replace the automatic«cuts». And it is all but certain that they won’t do so before the week is out and the «cuts»take effect.

Avoiding the Consequences

There is political risk «for» both parties in their strategies.

Obama has successfully shifted responsibility «for» past confrontations to congressional Republicans and has much the bigger megaphone to make his case.

“It seems like every three months around here, there’s some manufactured crisis,” Obama said last week, setting up yet another attempt to lay the blame «for» any bad outcomes on the GOP.

Republicans, without the benefit of the White House bully pulpit, are left to argue that the GOP House passed bills last year to replace the «cuts» with other «spending» reductions, something the Democratic Senate has never done, and that the president cannot continue to evade responsibility «for» the economy.

Senate Democrats hope to have a vote this week on their $110 billion «plan» that would increase taxes on the highest earners, boost taxes on oil derived from tar sands, «cut»defense «spending» by $27.5 billion over eight years and eliminate $27.5 billion in direct subsidy payments to farmers.

The Senate Democrats’ blueprint would avert the $85 billion in automatic «cuts» scheduled«for» March 1. And the additional $25 billion in their «plan» would replace additional sequester reductions through December.

Senate Republicans are considering a proposal that would give departments and agencies more flexibility to make alternative «spending» «cuts» rather than seeing all accounts «cut»by a fixed percentage.

Senate Appropriations Chairwoman Barbara A. Mikulski, D-Md., said Feb. 20 that the next continuing resolution might be a vehicle «for» legislation to replace the automatic«spending» «cuts» while writing into law unfinished fiscal 2013 appropriations bills.

That seems the most likely legislative outcome, especially since Boehner has said the Senate must act on sequester changes before the House will consider any.

Pentagon «Cuts»

The real-world effects of the across-the-board «cuts» were made manifest on Feb. 20 when the Pentagon officially notified Congress that most of its 800,000 civilian workers would be furloughed if the sequester goes into effect on time.

Defense Secretary Leon E. Panetta said in a written statement that workers would receive at least 30 days’ notice prior to a furlough and assured the workforce that benefits would be protected “to the maximum extent possible.”

In his notification to Congress, Panetta said the department remained hopeful that the White House and Congress would reach an agreement to avert the sequester threat, which would«cut» more than $45 billion from the Pentagon’s fiscal 2013 budget.

“The department must, however, continue to «plan» «for» such reductions should Congress not take action prior to sequestration taking effect,” Panetta wrote. “If sequestration is not avoided, the magnitude of the potential reductions will damage force readiness, slow major acquisition programs, and necessitate civilian furlough actions that will negatively affect our federal civilian workforce.”

The furloughs, which would save $4 billion to $5 billion, would not begin until late April, Pentagon Comptroller Robert F. Hale told reporters. That translates into a 20 percent pay «cut» «for»many of the department’s civilians in the last five months of the fiscal year.

Civilian personnel can be put on unpaid leave «for» a maximum of 22 days without triggering additional notification requirements. Military personnel are exempt from the automatic «cuts».

Jessica L. Wright, acting undersecretary of Defense «for» personnel and readiness, stressed that the effects of the furloughs would be felt around the country. Only 20 percent of Defense Department civilians work in the Washington area.

“This is not a Beltway phenomenon,” Wright said. The department’s civilians “live and work in every state of the union.”

House Armed Services Chairman Howard “Buck” McKeon, R-Calif., blamed the partisan standoff over «deficit» reduction on the “president’s political desire to raise taxes yet again.”

Underscoring the politics at play, Boehner likewise «called» out the White House «for» not exerting pressure on Senate Democrats to pass legislation to replace the sequester.

“As the commander in chief, President Obama is ultimately responsible «for» our military readiness, so it’s fair to ask: What is he doing to stop his sequester that would ‘hollow out’ our armed forces?” Boehner said.

«Simpson-Bowles» Redux

While lawmakers and the president exchanged barbs, the architects of the 2010 «Simpson-Bowles» «deficit» reduction «plan» offered a «new» framework «for» an additional $2.4 trillion in «cuts» over the next 10 years that they say splits the difference between the two parties.

“An agreement is possible without anyone having to give up on core principles,” former Republican Sen. Alan Simpson of Wyoming and Erskine Bowles, former chief of staff to President Bill Clinton, declared in a written explanation of their «plan». “The point of this «plan» is to push both sides to go beyond their comfort zone in order to reach a principled compromise with enough savings to bring the debt under control.”

The latest «Simpson-Bowles» proposal «calls» «for» replacing the automatic«spending» «cuts» with an unspecified package of “responsible «cuts» to unnecessary«spending» we cannot afford.”

Simpson and Bowles said Feb. 19 that their «new» «plan» is built around ideas developed during failed debt talks between Obama and Boehner, and is intended as a follow-up to the 2011 debt limit increase law and the fiscal cliff agreement.

Simpson and Bowles said the additional $2.4 trillion in «deficit» reduction over 10 years is needed to push the national debt below 70 percent of the gross domestic product. The Congressional Budget Office has projected that the debt will amount to 76 percent of GDP by the end of the current fiscal year.

The «new» «plan» «calls» «for» realizing a quarter of the additional «deficit»reduction through «revenue» generated by an overhaul of the tax code. Another 25 percent would come from curbs on health care «spending», and the remaining half from «cuts» in mandatory and discretionary «spending» and interest payments on the debt.

“This «plan» begins where the president and the Speaker left off,” Simpson and Bowles said in a joint statement. “It’s more health care than the Democrats would like, and more«revenue» than Republicans support. But in our view, it is the minimum size necessary to put the debt on a clear downward path.”

Simpson and Bowles «call» «for» a switch to a less generous cost-of-living adjustment formula, known as the chained consumer price index, «for» Social Security payments and other benefits, “applied government wide with protections «for» low-income beneficiaries.”

The «plan» also «calls» «for» «cuts» in farm subsidies, restructuring of higher education «spending», raising user fees and tightening defense and non-defense«spending» caps. It also would include changes in military and civilian health and retirement benefits.

The health care «cuts» would include provider «cuts», changes in cost-sharing rules, a reduction of drug costs and “cost-bending reforms that realign incentives” to reward quality.

Obama did not mention the «new» «Simpson-Bowles» proposal during his Feb. 19 remarks, but he did «call» «for» incorporating some of the original recommendations of the National Commission on Fiscal Responsibility that Simpson and Bowles co-chaired.

The «new» proposal by Simpson and Bowles drew praise from several organizations that follow fiscal issues.

Robert Bixby, executive director of the Concord Coalition, said the «plan» might clear the way«for» further negotiations. “Members of Congress are afraid to go forward. Maybe giving them a framework would give them a place to go,” Bixby said.

But Bixby said he doubts the two parties can reach a long-term debt agreement. “The odds aren’t with them,” he said. “Congress doesn’t know how to do it. Democrats aren’t anxious to tackle entitlements. Republicans don’t want to use any «revenue.”

John M. Donnelly and Kerry Young contributed to this report.