Lawmakers ready budget fallback options amid tax impasse

Defense Spending

For instance, McCain’s plan would keep 2014 defense spending at $524 billion instead of $498 billion under sequestration. Beginning in 2018, the plan would begin cutting more from defense than sequestration does, with the sharpest cuts coming in 2020 and 2021. Panel members also could give federal agencies more flexibility in distributing the cuts.

Three years of budget fights have helped drive congressional approval ratings to 9%, a 39-year low, according to Gallup Organization polling. Lawmakers now want to reconfigure sequestration and avoid another government shutdown in mid-January, when Congress must approve federal funding.

Any effort to reapportion the automatic cuts faces a roadblock in the Republican-led House, where Tea Party-aligned lawmakers want to resist trading concrete spending cuts for future reductions that future Congresses may reverse.

It also could face opposition in the Democratic-led Senate if members view it as a way of watering down the cuts. Senate Minority Leader Mitch McConnell, a Kentucky Republican, warned House Republicans in a closed-door meeting on Nov. 19 against trying to change sequestration’s $967 billion spending cap.

Spending Reduced

“It’s a bad idea to revisit a law that is actually working and reducing spending for the government,” McConnell said later that day. “We’ve reduced government spending for two years in a row for the first time since the Korean War.”

Another fallback option for easing the defense cuts would be trimming defense entitlements, a politically unpopular path that could include cuts to veterans’ supplemental Medicare program or require higher co-payments for prescriptions.

Spreading sequestration over a longer period or pushing cuts into future years could appeal to some lawmakers.

“While I’ve been a vociferous advocate for the big deal for a long time, at this point, to at least take the first step” by reconfiguring the cuts might “make some sense,” said Senator Mark Warner, a Democrat from Virginia, home to a large number of defense contractors and federal employees.

Added Flexibility

“Anything we can do to relieve pressure on the Defense Department through flexibility” or stretching out sequestration “would be acceptable to me,” said South Carolina Senator Lindsey Graham, a Republican on the panel. “There would be a lot of bipartisan support” for such an approach, he said.

In the first round of cuts, the Army had to cancel training for seven brigade combat teams and deferred maintenance on 172 aircraft, more than 900 vehicles, almost 2,000 weapons, and more than 10,000 pieces of communication equipment.

Lockheed Martin Corp., the largest U.S. government contractor, will cut 4,000 jobs in response to declining federal spending.

The next round will “directly affect the purchasing of new equipment, funding of research and innovation within the defense industry and put hundreds of thousands of middle-class jobs at risk,” according to a statement from Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat.

Rudy Penner, a Congressional Budget Office director from 1983 to 1987, dismissed the idea of tinkering with the automatic cuts timeframe.

“There are a lot of gimmicks you could use,” said Penner, who warned in 2011 that sequestration was a flawed mechanism with a history of failure. “I frankly was hoping they’d do a little better than that.”

Such a strategy “could lead to a continuous cycle in which Congress repeatedly avoids making cuts by promising even greater cuts in future years,” said Ed Lorenzen, policy adviser at the Committee for a Responsible Federal Budget.

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