Cantor looks for ways to replace automatic Defense spending cuts

House Majority Leader Eric Cantor (R-Va.) is talking to Democrats and Republicans about replacing automatic spending cuts triggered by the supercommittee’s failure with cuts to mandatory spending.

Aides said Cantor has discussed replacing cuts to the Pentagon and domestic spending set to be implemented in 2013 with cuts agreed to by both parties in deficit talks last summer led by Vice President Biden. The ideas are similar to cuts proposed by President Obama to the supercommittee.

Cantor would use the savings to pay for a one-year extension of the payroll-tax cut and an extension of federal unemployment insurance benefits, both of which are set to expire by the end of the year.

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Republican leaders including Cantor warned their rank and file Wednesday at a closed-door meeting that they must agree to the extension of the payroll-tax cut. Cantor said “taxes are a Republican issue and you aren’t a Republican if you want to raise taxes on struggling families to fund bigger government,” according to a source in the room.

No plan has yet been put on the table, but aides said Cantor has started bipartisan discussions on a year-end package in the hope Congress will act before leaving Washington for the holiday break.

Congressional Democrats and Obama support extending the payroll-tax cut and unemployment benefits, but the White House opposes canceling the automatic cuts to Defense and discretionary spending.

Given the leverage Democrats believe they hold over Republicans with the automatic Defense cuts,, they might be in no mood to compromise. The cuts to non-Defense spending exempt many parts of the social safety net.

At the same time, some Democrats have warned that cuts to Medicare triggered by the supercommittee failure would hurt hospitals in their districts. This suggests some Democrats could be interested in a deal that would put off automatic cuts to those programs.

The automatic cuts were set up when Congress passed legislation raising the debt ceiling in August. That deal set up the 12-member supercommittee, which had until Nov. 23 to come up with a plan for at least $1.2 trillion in deficit cuts.

The bipartisan panel’s failure triggered the automatic cuts, but they won’t be implemented until January 2013. That gives Congress more than a year to negotiate over alternatives.

Cantor would also include the so-called “doc fix” to ensure Medicare payments to doctors are not slashed at the beginning of next year.

The cuts from the Biden talks include reductions in spending on agriculture subsidies, food stamps, federal retirement benefits, Medicaid and other healthcare spending.

An aide said Cantor’s effort is being strongly backed by House Armed Services Committee Chairman Buck McKeon (R-Calif.) and ranking member Adam Smith (D-Wash.) is keen to avoid the sequester as well.

Smith's office clarified that the congressman does not like the sequester but wants a broad deficit deal to avoid it.

"Mr. Smith insists that any fix must involve revenues and cuts and must fix both defense and discretionary spending sequestration. Obviously, we want to find a way to turn off the sequester, which no one likes, but it has to be done by reaching a big, balanced deficit reduction deal – not by just saying never mind, we’re going to turn it off and let ourselves off the hook," spokesman Mike Amato said.

Cantor also has reached out to Sen. Joe Lieberman (I-Conn.) and Senate Democrats.

There is no timeline to produce a package, but the House is looking to adjourn by Dec. 16. Timing will depend on the level of support on both sides of the aisle.

Lieberman’s office declined to say whether the senator supports Cantor’s effort.

“He is in discussions with his colleagues about the various available options to avoid sequestration, which he believes would be very harmful to our Defense budget and the national security of the United States,” Lieberman spokeswoman Whitney Phillips said.

The Cantor discussions were first reported in Politico.

— This story was updated at 12:57 p.m.

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