Unless President Obama can reach a deal with congressional Republicans before Friday, $1.3 trillion in across-the-board federal government spending cuts will begin to take effect March 1. The cuts, known in Washington-speak as the “sequester” were never meant to happen. They were supposed to be the stick that was going to get Democrats and Republicans to agree to a long-term deal to reduce the deficit through a combination of taxes and spending. The sequester was the price of the August 2011 deal that got Republicans to agree to raising the limit on how much the federal government could borrow.
The idea was that both parties would be forced to agree to policies they did not like – because the alternative – cuts by “meat cleaver” rather than scalpel – would be much worse. The cuts were intentional divided between defense spending cuts (which Republicans oppose) and cuts to domestic spending and social programs (which Democrats oppose.)
The trouble is, so far, it hasn’t been enough of an impetus for both sides to come to a deal. President Obama says he wants more revenue increases so that the burden of deficit reduction will be “shared” through society – while Republicans have already agreed to increases on capital gains, dividend, and income taxes for high-income earners in January (as part of a deal to make permanent the bulk of the Bush tax cuts), say they have no stomach for more.
In addition, many Republicans in the House are now more interested in shrinking government, than they are maintaining defense spending. So the threat of Pentagon cuts ($43-billion in 2013) may not be as effective at getting them to the table as the president may have believed. Fiscal hawks such as senators John McCain and Lindsey Graham have called the cuts disastrous – but other Republicans believe any kind of tax hike would be worse.
Critics note that the federal budget will still grow under the sequester, though not as much as it would have otherwise. But the Obama administration is making the case that the impacts will be severe:
- The Congressional Budget Office predicts one million or more jobs will be lost in the U.S. this year due to the scheduled cuts, at a time when the U.S. economy is still struggling.
- Transportation secretary Ray LaHood has warned that the almost one billion dollars of scheduled cuts to his department includes $600-million to the budget of the Federal Aviation Administration, and will lead to furloughs for air traffic controllers. He has predicted 90-minute take-off delays at major U.S. airports that will ripple through the country. Air traffic control towers in smaller airports may be shuttered. He said the airport delays would begin being felt around April 1.
- The secretary of Homeland Security, Janet Napolitano, warned that border management would be hard hit by the cuts, as border patrol officers would be furloughed. “It would have serious consequences to the flow of trade and travel at our nation’s ports of entry,” she said. The U.S. will have to accept fewer international flights, and increase delays for clearing customs. Average wait times could increase by 50%. At seaports, container inspections could take up to 5 days longer, she said. The Coast Guard would reduce its presence in the Arctic by a third. Asked how the sequester would affect border wait times, Napolitano said: “All I can tell you is that with sequestration, that situation is not going to improve, it’s going to go backwards.”
- Education secretary Arne Duncan said 10,000 teachers would lose their jobs, and some 70,000 poor kids would be kicked out of “Head Start” early education programs.
Republican leaders are under pressure to hold their ground on taxes. A conservative senator is warning that the Republican caucus would oust John Boehner as Speaker of the House if he agreed to any more tax increases in order to avert the sequester.
Meanwhile, the president has been traveling the country making the case that the cuts will be disastrous for various sectors of the economy. Today he travels to a shipyard in Virginia.
In response, congressional Republicans have proposed a plan that would give the president more discretion in deciding what programs will be cut – a move opposed by the White House.
A new poll suggests that more Americans would blame Republicans (45%) is not deal is reached to avert the cuts, than would blame Obama (32%).
But perhaps the two side will find a way of delaying, yet again, the impacts. The track record in this town lately has been one of last-minute deals that avert disaster — but only by kicking it down the road, and keeping the economy in the grip of uncertainty.