The reaction in Washington defense circles to the two-month delay to across-the-board defense cuts included in last week’s fiscal cliff legislation has been mixed. Some believe the so-called sequestration cuts are far less likely than just a few weeks ago; others are more sure than ever that $500 billion in cuts to planned defense spending will occur.
Only time will tell which group ultimately is proven correct. There are signs to support both hypotheses. But it is instructive to understand just how close sequestration came to being triggered last week, and to mull the largest obstacle in coming efforts to avoid the twin reductions to defense and domestic spending.
I arrived at the Capitol during the lunch hour on Sunday, Dec. 30, and began talking to senators almost immediately. It quickly became apparent there was nothing in the compromise being worked out by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., to delay or replace either the domestic or defense spending reductions.
That was 12:30 p.m. By 5 p.m. that afternoon, in the Ohio Clock Corridor just off the Senate floor, there was buzz about a delay. As senators trickled out of party caucus meetings, reporters learned Senate Democrats had proposed a two-year delay to both parts of sequestration.
But Republicans immediately rejected the offer. GOP senators did not like how Democrats proposed paying for the delay. The Democrats wanted even more new federal revenues than were included in the fiscal cliff-avoiding tax deal worked out by Biden and McConnell.
Between 5 p.m. and 7:30 p.m., lawmakers shuffled through the Clock Corridor sounding more and more frustrated about just what to do about sequestration. It was not Concern A, nor even Concern J. But it was something both sides opposed. Doing something about it, however, appeared unlikely as Dec. 30 faded into New Years Eve. The eventual compromise two-month delay did not surface until early afternoon on New Years Eve. And it was hours later still that both sides agreed on how to pay for delaying the cuts by nine weeks, much less permanently.
In fact, one of the most striking hours of the fiscal cliff saga for reporters covering it live inside the Capitol came on the evening of Dec. 30. Frustrated lawmakers on both sides seemed willing to let sequestration occur. Not because they wanted the automatic cuts, but because they so disagreed with their colleagues on the other side of the aisle about what should be used to pay for delaying the cuts.
And therein, for this correspondent and defense observer, lies the biggest threat to the Pentagon’s budget.
White House Press Secretary Jay Carney said during a Jan. 8 briefing that President Obama, in coming sequestration and debt-ceiling talks with congressional leaders, is open to “eliminating” the defense and domestic cuts.
But Obama said in late December any such package must include other spending cuts and new revenues. As was clear those three days watching the fiscal cliff play out up close was Republicans are dead set against the latter and Democrats aren’t exactly rushing to propose entitlement program cuts.
Carney this week doubled down on the president’s demand. This should raise new concerns about the ability of the two sides to agree on the contents of a sequestration “pay-for,” Hill jargon for an equal amount of deficit reduction measures as the $1.2 trillion from sequestration would generate.
Obama will “continue to seek to compromise with Congress when it came to achieving a balanced approach for continued deficit reduction,” Carney said.
We have learned a few things in recent years about the negotiating tactics of Obama and congressional leaders. There’s no evidence those tactics will change much. Another last-minute deal is likely. Another days-long series of negotiations and half-measures and caucus meetings is likely. That inevitably will leave messy details to iron out as yet another sequestration deadline (March 1) nears. And that will again bring the stark “pay-for” differences to the surface.
The Republican and Democratic parties have drifted miles apart in recent years. Let me repeat: They do not appear to agree on enough possible “pay-for” package contents to permanently turn off sequestration.
Come late-February, the White House and Congress will be seeking three deals: one on sequestration, one on the debt ceiling, and one on averting a government shutdown. Possibly at the same time. You think lawmakers got grumpy and frustrated last time around, when they were dealing with just the fiscal cliff? Just wait for the coming Triple Cliff.
Will lawmakers simply throw up their hands and take the path of least resistance to the $1.2 trillion in further deficit reduction some economists say would give Washington acceptable debt levels for a decade?
Maybe. Maybe not. But consider that it almost happened last week — when, arguably, less was at stake.
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