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Old 01-24-2013, 10:51 AM   #2
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How will Congress fix the sequester? Nobody knows!
Posted by Suzy Khimm
on January 22, 2013 at 4:02 pm

The House GOP’s bill would prevent a debt-ceiling stand-off in February. But even if everything goes according to plan, the agreement won’t do anything to stop the automatic, across-the-board cuts from taking effect on March 1, which both parties insist they want to avoid.

Here’s why: The bill suspends the debt-ceiling for three months, with the understanding that the Senate will pass a budget resolution in the next few weeks. On Sunday, Senate Democrats indicated that they’ll be willing to go along with the plan, promising to pass a budget resolution by March 1 that they say will include both spending cuts and tax increases.

In theory, that budget document—a blueprint that sets broad targets for fiscal policy—could be a vehicle for a big deficit reduction deal that could replace or suspend the sequester. But even if the Senate came up with a budget blueprint by March 1, it’s highly unlikely that the House would simply pass that bill without batting an eye. Right now, their plan seems to be that “Rep. Paul Ryan (R-Wis.) will introduce a budget that will balance in 10 years — a proposal to cut dramatically more than his spending plan last year,” my colleagues report.

As such, the House and Senate would almost certainly have to go to conference to come up with a compromise between each chamber’s budget resolution—essentially kicking off another round of the negotiations that President Obama and House Speaker John Boehner (R-Ohio) had in the lead up to the fiscal cliff. That’s likely to be a protracted process—one that will probably take weeks after the March 1 sequester deadline to finish. So as it stands, Congress will still have to put together a separate plan if it wants to prevent the sequester cuts from going into effect on March 1.

Why, then, would House Republicans and Senate Democrats agree to a game plan that leaves the sequester off to the side, when everyone was so afraid of those cuts before Dec. 31? For Republicans, it’s another potential point of leverage: As during the fiscal cliff negotiations, they’ll likely demand cuts for any length of time that the sequester is suspended, which gives them another bite at the apple in terms of reducing spending.

Some conservatives claim they’d simply let the sequester take effect, as they’re viewed as “real cuts” as opposed to the empty promises they’ve heard from Congressional leaders. ”Clearly, we don’t think the way the sequester is set up will be helpful to national security or the defense industry,” a House GOP aide tells the National Review. “But we are committed to cutting spending in the federal government. So we’re not turning back on that.”

Democrats, however, may view such talk as simply bluster, knowing that there’d be far too much resistance from GOP quarters on the defense cuts for the sequester to ever fully take effect. For now, they’re just satisfied that Republicans appear to have capitulated over the debt-ceiling, at least temporarily, without being able to extract upfront cuts. In the relative scheme of things, they believe the sequester is bad policy but a potential debt-ceiling breach would be much worse. So they’ll deal with the next deadline when it comes to it, knowing that they’ve got a 1:1 ratio of revenue to spending cuts the last time they had to deal with the sequester.
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