Sequestered cuts keep K Street on high alert

A variety of interests lobbied on the dreaded budget sequestration last quarter, according to lobbying disclosure records.

Defense contractors, healthcare groups and associations representing everything from housing to education reported that they were monitoring, and in some cases opposing, the budget cuts that are set to begin next year. The cuts were set in motion by the agreement to lift the debt ceiling last summer. 


Sequestration is expected to be one of the major lobbying issues of 2012 as industries affected by the cuts push Congress to roll them back.

If Congress doesn’t act, the planned sequester will slash the federal budget to the tune of $1.2 trillion over 10 years. The reduction includes $500 billion in defense spending and $123 billion in payments to Medicare providers.

Ken Raske, president and CEO of the Greater New York Hospital Association, told The Hill that with the healthcare reform law under threat at the Supreme Court, budget sequestration would only add to the financial burden on the healthcare system.

“We may end up with the cuts but not the benefits” if the healthcare law is overturned, Raske said. 

“This could be a compounded horror show for the hospitals.” 

The spending cuts could hinder hospitals providing care to patients, according to Raske.

“Every time we turn around in Washington, people are talking about cuts to hospitals and healthcare,” Raske said. “They are [only] so many cuts that the healthcare system can take without it jeopardizing the ability of the healthcare system to deliver services.”

Others in the healthcare sector are worried about the impact of sequestration. A spokesman for America’s Health Insurance Plans (AHIP) said the healthcare reform law included more than $200 billion in cuts to Medicare Advantage, which could affect seniors. 

“Additional cuts to the Medicare Advantage program as a result of sequestration will further put at risk the coverage that millions of seniors rely on today,” said Robert Zirkelbach, the AHIP spokesman.

Consequently, several healthcare trade groups reported lobbying on specific legislation that would stop sequestration.

On behalf of AHIP, two lobby firms — the C2 Group and the Duberstein Group — reported lobbying last quarter on a bill introduced by Rep. Edolphus Towns (D-N.Y.) in November that would exempt Medicare providers from the sequestered cuts.

Other trade groups also lobbied on the bill, including Raske’s group, the American Hospital Association, the California Hospital Association and the Healthcare Association of New York State, according to lobbying disclosure records.

Defense contractors are also worried about the looming budget cuts. 

Dan Beck, a Boeing spokesman, said the aerospace giant’s defense, space and security division has been evaluating for “a potential devastating impact” from sequestration.

“In our internal planning, we have made assumptions including the worst-case scenario and designing our cost structure to accommodate a potential $1 trillion cut resulting from sequestration,” Beck said.

The threat of the defense budget cuts has already led to some changes in planning at the company.

“So we’re managing our risk by trying to get ahead of the curve through infrastructure cost reductions, including facilities consolidation, workforce redeployment and several other initiatives here and across our supply chain to make our products even more affordable,” Beck said.

Consequently, Boeing reported lobbying on “sequestration impacts” this past quarter, according to lobbying disclosure records.

Other big defense contractors followed suit. Lockheed Martin mentioned sequestration in its latest lobbying report, while General Dynamics said it “monitored the actions of the Congress regarding sequestration,” according to records.

While healthcare and defense are the biggest interests on a K Street worried about sequestration, others outside of those sectors are likewise lobbying against the cuts.

“The concern is that lawmakers will try to cut programs to just make the numbers work rather than giving thoughtful consideration to what programs need,” said Michelle Kitchen, director of government affairs for the National Affordable Housing Management Association, which represents property managers and owners who participate in federal affordable housing programs.

Kitchen said the Department of Housing and Urban Development’s (HUD) budget for the 2013 fiscal year already cuts spending on the Section 8 affordable housing program. Sequestration will likely shrink the budget for the program even more.

Kitchen’s group reported lobbying on sequestration this past quarter. So did the National Association of State Directors of Special Education, according to lobbying records.

Nancy Reder, deputy executive director of the education group, said educators are concerned about cuts to federal education and health programs. The lobbyist said she doesn’t think the impact of the budget cuts starting next year is truly understood yet.

“I am not certain that Americans understand the impact [that] 9 percent across-the-board budget cuts will have on local communities. Folks don’t seem to crunch those numbers at the local level. We have found as we go out to speak to people around the country that they have little or no understanding of sequestration,” Reder said.