Here comes Sequester: Part 2

An unwelcome sequel is scheduled for January release and it’s titled Sequester: Part 2.

It is increasingly likely that this second round of indiscriminate cuts will reprise the first sequester, with concomitant public frustration about Washington’s inability to budget rationally.

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The first sequester, triggered by the 2011 Budget Control Act, required agencies to cut $80 billion equally from across their operations.

Lawmakers in both parties said they wanted to avoid using this blunt fiscal ax and criticized it for cutting the good with the bad. Agency heads decried worker furloughs and warned of economic pain.

The second year of the 2011 Budget Control Act was supposed to be easier.

From 2014 on, the act imposed spending ceilings on the government that were meant to force appropriators to make considered decisions on spending cuts instead of across-the-board slashing.

But it appears likely that Congress will fail to agree to specific cuts, and will punt the decisions to agencies.

The House Appropriations Committee on Tuesday adopted top-line figures for each of the 12 appropriations bills. These are so different from the Senate’s likely bills that it will be all but impossible to reconcile them, lawmakers say.

“It is too early in the year to condemn us to an inevitable CR [continuing resolution] — it’s progressing in that direction. That’s the message we have been putting out loud and clear,” Appropriations Committee Chairman Hal Rogers (R-Ky.) said Tuesday, adding, “We don’t want a long-term CR. We are boxed in, which I don’t like.”

Unless President Obama and congressional leaders reach a deficit grand bargain, experts say Congress is on track to put most spending on autopilot with another continuing resolution.

The government is operating under a continuing resolution set at $1.043 trillion, but the Budget Control Act would set the fiscal 2014 spending level at $967 billion. That would require a cut of about $76 billion across the government.

That cut would need to be made 15 days after Congress adjourns at the end of the year. Implementing it without furloughs or layoffs could be very tough for agency heads, who have already struggled to find one-time savings this year, aides said.

Rogers called the sequester situation “idiotic” but said his hands are “tied” by the Budget Control Act, the House-passed budget and House rules.

Under the House budget authored by Rep. Paul Ryan (R-Wis.), Rogers must keep the 12 bills at $967 billion in total spending. Ryan’s bill increases funding for defense, compared to the Budget Control Act forcing deeper cuts to social programs.

The Senate budget allows Senate appropriators to spend a total of $1.058 trillion.

Rep. Rosa DeLauro (D-Conn.) on Tuesday offered an amendment in committee to replace the 2013 and 2014 automatic cuts with a combination of tax increases and cuts to future defense and farm spending, but it was defeated after Rogers argued against any new tax increases.

Rogers’s committee then adopted top-line spending numbers for each of the 12 appropriations bills for 2014, cutting job and healthcare funding 18 percent below the current sequester and foreign aid and environmental programs by some 15 percent.

Sen. Tom Harkin (D-Iowa), who heads the Senate Appropriations Labor subcommittee, argued the cuts would be devastating.

“Do they intend to eliminate the entire National Institutes of Health? That wouldn’t be enough to achieve their proposed cut,” he said. “Do they plan to eliminate all funding for special education, Title I, after-school centers, and teacher quality? Again, that wouldn’t be enough to achieve their proposed cut.”

Rogers said producing some of bills, such as the noncontroversial Homeland Security and Veterans Affairs spending measures, is better than producing none.

“It is my sincere hope that there will soon be a budget compromise that will undo the damaging sequestration law and give us a single, common top-line allocation with the Senate,” he said. “However, until that time, we cannot sit by the wayside waiting for a deal to be made.”

Ranking member Nita Lowey (D-N.Y.) predicted that the committee would only produce those two bills plus defense and agriculture measures this year.

The rest of the bills, because they require such embarrassingly deep cuts, would not even be marked up.

“It’s inevitable that we’re going to head toward a CR,” she said.

Another factor making a CR increasingly likely is the surprise extra revenue that has come into government coffers from tax hikes and an improving economy. That means Congress won’t have to lift the debt ceiling — the likely vehicle for a grand bargain —until sometime around November.

Lowey said that means no grand bargain talks will be coming before the fiscal year ends Sept. 30.

She also pointed to confusion among Democrats on how to handle the train wreck.

“We don’t know what the president is thinking, we don’t know what [the Office of Management and Budget] is thinking,” she said.

For Republicans, the cuts to defense are the hardest to swallow, so there has been some talk of reversing the 2013 sequester and raising the 2014 budget cap for defense as part of a July debt-ceiling bill.

Rogers said there have been preliminary discussions on the content of that bill, which sources say could also address tax reform and issues like the stalled Keystone XL oil pipeline. But he said no decisions have been made.

Even if the House replaces part of the defense cuts in its July bill, it is unlikely Senate Democrats would go along if domestic agency cuts remain in place.

Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) is expected to begin moving bills at the Senate’s higher level of spending in June, aides said. There is little expectation in the Senate that a sequester, part 2 can be avoided.

“Agencies have been emptying the cupboard to deal with the first sequester ... if you ask them about the next round, especially on the defense side ... they are afraid,” an aide said.

Mikulski told The Hill on Tuesday that she is still reviewing the House spending allocations, but she would try to avoid a CR by passing an omnibus package of detailed changes to all federal agencies.

“I am going to try for regular order or for an omnibus,” she said.

Doing that would be a tough lift. Mikulski tried and failed to enact an omnibus to deal with the 2013 sequester.