Fiscal Cliff Blog (Day 3): Charting Defense-Related Developments as Lawmakers Seek Deal

U.S. Senate Minority Leader Sen. Mitch McConnell, R-Kent., speaks as (L-R) Sen. John Barrasso, R-Wyo., Sen. John Thune, R-S.C., Sen. John Cornyn, R-Texas and Sen. Roy Blunt, R-Mo., listen during a news briefing earlier this month. (Photo by Alex Wong/Getty Images)

Defense News has been charting efforts to avoid the dreaded fiscal cliff and, possibly, the $500 billion in Pentagon budget cuts set to kick in on Wednesday (Jan. 2).

The House and Senate have approved a bill negotiated by Vice President Joe Biden and Minority Leader Mitch McConnell, R-Kent., that would extend most set-to-expire tax cuts for all Americans except for individuals who make more than $400,000 annually and couples who earn more than $450,000. Senate Majority Leader Harry Reid, D-Nev., became a secondary negotiator. It delays the sequestration cuts to planned Defense Department spending — and an equal amount of domestic cuts that also are set to take effect Jan. 2 — by two months.

Below is our live blog of defense-related developments. We hope you will share the link with others, and check DefenseNews.com for full coverage.

11:05 a.m. (Tuesday): BREAKING: The House on Jan. 1 approved the Biden-McConnell measure that partially averts the fiscal cliff and delays pending cuts to planned Pentagon spending until March. It now goes to the president for his signature. Full coverage soon at DefenseNews.com.

7:05 p.m. (Tuesday): House GOP leaders will whip votes on a spending cuts amendment to see if there are 218 votes in the Republican caucus. If not, it appears Biden-McConnell will be brought to an up-or-down vote. The deal is not dead yet. But sequestration remains the law of the land. For now.

3:35 p.m. (Tuesday): The Congressional Budget Office has scored the Biden-McConnell bill. CBO determined it would add to the deficit, and features over 40 times more revenues to cuts. GOP House members want to change that, putting the legislation in jeopardy.

3:30 p.m. (Tuesday): BREAKING: The deal could be in jeopardy as House Republicans express their disgust. GOP lawmakers want spending cuts, and a lot of them. Could the massive defense budget be a target for the hungry GOP wolves? House could amend the bill and send it back to the Senate. As crafted, the measure could have a tough time passing the House.

11:20 a.m. (Tuesday): The White House announces Biden will attend a 12:15 p.m. House Democratic caucus meeting about the fiscal cliff legislation. The search for and finalizing of support is well under way.

11:15 a.m. (Tuesday): The House GOP leadership has released its floor schedule for Tuesday. The Biden-McConnell bill is not included on the docket. Yet. House members say they want time to review the legislation.

11:03 a.m. (Tuesday): The Biden-McConnell bill sets March 1 as the new sequestration deadline, with an implementation date of March 27 if federal spending reduction targets are not met in January or February.

2:20 a.m. (Tuesday): Under an 89-8 vote, the Senate approved a measure hammered out by McConnell and Biden that raises tax rates on individuals earning more than $400,000 annually and couples making above $450,000. It also addresses the estate tax and reforms that capital gains tax. The deal also delays by two years big cuts to planned domestic and defense spending. The House is expected to vote as soon as Tuesday. The U.S. stock markets are closed Tuesday for the New Years Day federal holiday, meaning the president could sign the bill before the markets re-open.

6:32 p.m. (Monday): “Happy New Year!” So reads the official end-of-day email from the House Radio and TV Gallery, meaning the House has completed all planned votes for the day. America, that weightless feeling is not from your first glass of New Years Eve bubbly. No, it’s from the start of our collective — though likely brief — descent off the fiscal cliff. The House convenes at 12 p.m. tomorrow. Be safe tonight, all.

6:15 p.m. (Monday): The House will not vote on the Biden-McConnell package; it remains unclear whether the Senate will vote on New Years Eve. The House’s slower approach means the United States technically will go over the fiscal cliff, and the defense cuts technically will kick in. But Jan. 1 is a federal holiday, and a vote on Jan. 2 — or even Jan. 3 or 4 — would easily avert the worst expected consequences of both, lawmakers and analysts say.

5:43 p.m. (Monday): “Deal.” That’s what Sen. John McCain, R-Ariz., told reporters after exiting a closed-door GOP caucus meeting in the Capitol. Minutes later, when pressed, McCain said GOP leaders and the White House “basically” have a deal in place to avoid the fiscal cliff and delay sequestration. The two sides, however, have yet to nail down just how to pay for that two-month delay, which could cost around $24 billion.

4:52 p.m. (Monday): The nation may fall off the fiscal cliff after all. And the defense cuts may go into effect. But both would be very temporary. There are no votes scheduled in either the House or Senate tonight on the Biden-McConnell package. There have been rumors flying all afternoon among lawmakers, aides and journalists that a vote could happen late this evening in the Senate, and tomorrow or Wednesday in the House. Or both chambers could vote tomorrow or Wednesday. Both parties agree the worst effects of the fiscal cliff wouldn’t occur for months, giving all involved a little wiggle room on getting this done.

2:50 p.m. (Monday): Senate Armed Services Committee Ranking Member John McCain, R-Ariz., tells reporters he is “confident” the defense sequestration cuts will be delayed, and will never take effect. Though he acknowledged he is not a part of the Biden-McConnell talks, he indicated defense officials’ warnings about the cuts to planned spending will convince lawmakers to support a delay. He is unsure how the two sides will propose paying for the delay.

2:35 p.m. (Monday): Some conservatives like Sen. Bob Corker, R-Tenn., are enraged Obama is insisting on new revenues to delay the sequester cuts. Asked by Defense News whether he could support that, Corker angrily replied: “Not under the president’s rules. Count me out. “I mean, it’s unbelievable that he’s proposing that,” Corker said as he boarded an elevator to go to the Senate floor. He then blared: “Unbelievable! Unbelievable!”

A calm Senate Armed Services Committee Chairman Carl Levin, D-Mich., moments later told Defense News he is confident that “one way or another” the two political parties will find a way to pay for a sequestration delay. Levin’s remark was accompanied by the wry grin of a veteran lawmaker who knows it won’t be hard to find the $24 billion to delay the sequester by  two months. But, still, it’s agreeing on the contents of that $24 billion that could prove tough by midnight.

2:21 p.m. (Monday): The remaining question, as McConnell announces a deal on tax rates has been struck is: Can the two sides agree on ways to pay for the costs of delaying the sequestration? “I just can’t say that we can at this point. We just don’t know,” Sen. Orrin Hatch, R-Utah, told me.

1:55 p.m. (Monday): President Obama says a deal is “close.” But he reveals delaying the sequester cuts is a sticking point. He sends a message to Congress, saying a solution “has to be balanced,” meaning revenues have to be on table. Story soon at DefenseNews.com.

1:35 p.m. (Monday): BREAKING: More indications that a sequestration delay is likely. A big question is the length. In comments to reporters yesterday, Republicans and Democrats were far apart on how to pay for such a move.

1:25 p.m. (Monday): Sen. Kay Bailey Hutchison, R-Texas, says leadership tells her a deal is close. Says Senate cannot pass something that only gets Republican or only gets Democratic support “because it will not pass the other house.” Adds some refining” of the existing framework must still be done. Hutchison hints a final vote could occur by the time the ball drops. “Since this could be my final day” as a senator, the retiring Hutchison said, before talking about her experiences with Iraq and Afghan war veterans.

12:58 p.m. (Monday): A wide-smiling Sen. Bill Nelson, D-Fla., on the Senate floor: “The hour is nigh.”

12:46 p.m. (Monday): BREAKING: A deal appears close. The White House issued a statement announcing “the President will deliver remarks about the fiscal cliff at a White House event with middle class Americans.” And the incoming No. 2 GOP senator, John Cornyn of Texas, announced Senate Republicans will meet at 2 p.m. Media reports emerged just before those announcements that a deal is emerging that would extend unemployment insurance benefits and extend tax cuts for couples who make $450,000 or less. The AP reported one final sticking point is what to do about the sequestration cuts, with Democrats still pushing to delay them.

12:17 p.m. (Monday): Reporters are milling about near McConnell’s office. Word is he’s on the phone, presumably with Vice President Biden. The so-called “McConnell Whisperer” is the GOP leader’s fiscal cliff/sequestration “dance partner.” Less than 12 hours until the deadline, folks.

11:20 a.m. (Monday): How many votes might a deal that allows sequstration to occur get? More than one might expect. One of the most striking things about Sunday and today has been how many Republicans and Democrats are saying extending tax cuts while allowing the defense and domestic spending cuts to kick in might be the wisest approach. The latest: Sen. Barbara Boxer, D-Calif., who said on the Senate floor that she voted in August 2011 “for a sequester if we couldn’t find savings.” Without a deal in the next few hours that does just that, voiding the sequester, “we have to step up and do the sequester,” Boxer said. “We can’t run away from the things we’ve said.”

11:03 a.m. (Monday): Reid opens the Senate’s day by saying “negotiations continue as I speak.” The Majority Leader said “there are still some issues that need to be resolved before we can bring the legislation to the floor.” Reid gave further credence to the belief on Capitol Hill that the coming “small deal” will focus mostly on extending tax cuts for most Americans. Sen. Tom Harkin, D-Iowa, followed Reid, however, and blasted media reports that Democratic leaders were willing to extend tax breaks for all individual earners who make $450,000 or less. Harkin suggested Senate Democrats would oppose setting the level of tax-break extenders that high.

10:08 a.m. (Monday): Most of the calls from lawmakers in recent has been for compromise to avert the fiscal cliff and the defense and domestic sequestration cuts — meaning: for the other side to give in. The House largely is waiting today for the Senate to send it some kind of partial cliff-avoidance legislation. But its members filed into the ornate House chamber for morning speeches, and the one-sided calls for “compromise” continued. First up was Rep. Rob Wittman, R-Va., who called for spending cuts — the kinds of domestic programs favored by Democrats. Next up was outgoing Rep. Dennis Kucinich, D-Ohio, who passionately said “government works.” But the outspoken liberal did not follow that with a ptich for Medicare or Medicaid. No, he said government functions just fine for defense contractors and oil companies. Some political pundits believe members of the two parties are playing a game. But this correspondent hears a very different thing: Two political parties that have very different worldviews and visions for what the priorities of the United States of America should be, and how it should spend taxpayer funds.

5:50 p.m. (Sunday): Reid brought the Senate back into session, announcing the upper chamber will convene at 11 a.m. on Monday (Dec. 31). For those counting, that’s 13 hours before a fiscal cliff dive would occur and the cuts to planned Pentagon and domestic spending would be set in motion. Reid’s top deputy, Durbin, told reporters about an hour prior to Reid’s scheduling announcement that Democrats are having troubling “quantifying the true effects” of going off the cliff.

4:49 p.m. (Sunday): Reid, in the midst of a large gaggle of reporters, says of a making a new Democratic counteroffer: “We just did.” He went into the Senate chamber without elaborating, however.

4:12 p.m. (Sunday): “We’re off that,” Sen. Olympia Snowe, R-Maine, said of McConnell’s chain CPI proposal moments after she emerged from the Senate GOP caucus. Sen. John McCain, R-Ariz., called it “not a winning hand for us.” The Republicans wanted the CPI change to pay for other things, leaving lawmakers and the White House now searching for other routes to the $1.2 trillion target.

2:15 p.m. (Sunday): Talks between Reid and McConnell appear to have broken down, leaving McConnell saying bluntly on the Senate floor he needs “a dance partner.”  Politico reported the possibly fatal impasse is over a McConnell-pitched change in “calculating entitlement benefits as part of the fiscal cliff package, according to Democratic sources. The provision, known as ‘chained CPI,’ is opposed by many progressives because it would result in lower payments for Social Security beneficiaries.” Moments before the upper chamber moved on to a planned vote on an unrelated matter, Reid said: of talks between McConnell the White House: “I wish them well.”

1:48 p.m. (Sunday): Outgoing Sen. Joseph Leiberman, an Armed Services Committee member, tells me the Reid-McConnell deal “might not have to touch sequestration.” That’s because, he said, if it raises enough projected revenues by killing tax cuts on high earners, the sequester savings would not be required to hit a $1.2 trillion deficit-reduction goal.

1:40 p.m. (Sunday): “We’re kind of in a period where members don’t know yet what we’ll be voting on,” Boxer said in a brief interview while strolling to her office from the Senate floor. She is unclear on whether sequestration will be covered by the still-emerging Reid-McConnell plan, but believes it would not be addressed.

1:09 p.m. (Sunday): Sen. Barbara Boxer, D-Calif., says on the Senate floor that the bipartisan deal would avoid “part of” the fiscal cliff, another sign sequestration would not be addressed in the Reid-McConnell bill. Boxer calls for bipartisanship, notes “uncertainty” created in days after a cliff dive and a late-week deal would hurt still-sputtering U.S. economy. “We have to meet each other halfway,” Boxer said.

1:07 p.m. (Sunday): Senate Majority Leader Reid speaks first on Senate floor. He does not mention ongoing talks with McConnell and White House about fiscal cliff deal. Says political parties will caucus separately around 3 p.m., presumably to discuss progress on a cliff deal, and the next steps.

1:03 p.m. (Sunday): Barry Black, the Senate chaplain, asks a higher power to help senators “avoid self-inflicted wounds.”

10:50 a.m. (Sunday): The No. 2 Senate Democrat, Dick Durbin of Illinois, indicates on CBS’s “Face The Nation” that the two sides remain far apart on issues like taxes. His comments are received by some as evidence a bipartisan deal might collapse, leading Senate leaders to present their own plan for a vote on Monday.

 

 

John T. Bennett

John T. Bennett

Bennett is the Editor of Defense News' CongressWatch channel. He has a Masters degree in Global Security Studies from Johns Hopkins University.
John T. Bennett
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