Don’t be surprised if the barometric pressure in Washington’s atmosphere and the blood pressures of many Beltway denizens shoot up this week. As emotional, important, and timely as the debates over immigration and gun control are, the increasing likelihood that budget sequestration will, in fact, kick in March 1 is just now starting to sink in.
As veteran lobbyist and appropriations guru Billy Moore said in a Feb. 10 memo to clients, “The cuts will reduce domestic programs by 5.1 percent and defense by 8 percent, but since they come in the middle of the fiscal year, the impact is closer to 9 percent for nondefense and 13 percent for defense programs.” And he noted that most agencies will likely see “14-day furloughs for employees and layoffs for new hires,” potentially harming such things as “meat inspection, customs, and law enforcement.”
The thinking behind sequestration was that the penalty for not sufficiently reducing the deficit would be so draconian that members of Congress would do whatever it took to avoid it. No one realized that quite a few members from both parties would prefer sequestration to making the painful concessions necessary for compromise—but that’s where we are.
The cuts are becoming a real possibility because enough Democrats and liberals feel that sequestration beats the alternative. Social Security, Medicaid, and, to a lesser extent, Medicare would be exempted from the $85 billion in spending cuts, meaning the budget ax would fall more heavily on defense than domestic spending. But it remains to be seen whether this thinking will hold up as affected constituencies begin to scream murder.
At the same time, the days when Republicans and conservatives (of either party) would have seen such levels of defense cuts as nothing short of treasonous are over. GOP lobbyists privately estimate that as many as two-thirds of House Republicans see the defense budget as bloated, and say they aren’t willing to trade away domestic spending cuts to preserve Pentagon spending at or near current levels.
Meanwhile, the relationship between President Obama and House Speaker John Boehner has deteriorated to the point that Boehner doesn’t trust Obama and says he will never negotiate with him again, and the president sees Boehner as unable to carry enough of his own members to close a deal. So any agreement is probably going to have to be done the old-fashioned way, through regular order: writing and passing bills by committees; debating on the floor; and voting, with a joint House-Senate conference convened to iron out the differences—the way the legislative process is supposed to work and once did.
The general feeling among Republicans is that, because they caved in during the year-end, fiscal-cliff fight, they have to dig in on additional tax increases and make Democrats agree to substantial revenue cuts. The no-additional-taxes position might have some give to it. Democrats will likely offer some politically dicey amendments that in the big picture won’t add up to much more than chump change—for example cutting the deductibility of corporate aircraft—but Republicans might not want to lay across the railroad tracks to oppose cuts like these. Keep an eye out for the “carried interest” issue, the provision that allows hedge-fund and private-equity managers to have certain income taxed at lower, more favorable rates than normal, earned income. It’s a lot of money for them and an issue that has enormous political fundraising implications.
One thing to be mindful of is that for Senate Minority Leader Mitch McConnell, holding a vote on another tax increase is not an option. If this were to happen, he would essentially be handing a potential tea-party opponent in next year’s Kentucky GOP primary a key issue. McConnell is hardly the only Republican in the Senate or the House with primary stress weighing heavily on his shoulders.
One reason this legislative catastrophe is becoming more likely is that communications and understanding between the two sides has deteriorated to the point that neither side has a clear or realistic idea of how much the other side is willing or able to bend. In the budget debacle of a year and a half ago, many believe that after a tentative deal had been reached, Obama pushed Boehner to compromise still more, to the point that the Republican speaker couldn’t remotely win sufficient GOP caucus support for the deal to pass.
Meanwhile, corporate CEOs are flying to Washington to hector Congress to deal with the budget problem. Some old-time Hill experts suggest that these captains of industry would accomplish more if they fanned out across the country in an attempt to build public support for compromise, because grassroots pressure would enable more members to go along with a deal. Members need air cover back home—support that business leaders could provide, rather than tiresome lectures in Washington press conferences and at photo ops.
This article appeared in the Tuesday, February 12, 2013 edition of National Journal Daily.