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A 'self-inflicted wound'? Making sense of the senseless sequester

This article first appeared in the St. Louis Beacon, Feb. 27, 2013 - WASHINGTON – Hardly anyone really wants it to happen. Absolutely no one wants to take the blame for it. And there are plenty of options to avoid it.

But sequestration – the slasher spending provision inserted into a deficit-reduction law to scare Congress into agreeing on a more rational approach – is about to strike on Friday.

What happened? What’s taking place this week on the Kabuki theater stage of Washington? And are the Chicken Little predictors of sequester doom on target?

The origins of the Frankenstein-like invention – in the sense of a bright idea coming back to haunt its creators – were in the murky weeks of political back-and-forth that eventually resulted in the Budget Control Act in August 2011.

Author and journalist Bob Woodward attributes the poison-pill concept to the White House, although congressional GOP leaders also embraced it. The main invention of the budget bill was to set up a Capitol Hill “super committee” that both sides hoped would come up with a grand deficit bargain by the following Turkey Day. But the super panel turned into a turkey and came up with nothing.

That left the threat of sequestration, a old legal term that was redefined on Capitol Hill in the mid-1980s to signify a tight cap on the amount of government spending within broad categories. In other words, an across-the-board budget cut, with a few modifications and exceptions.

The sequestration clock was set back a few times, but the alarm goes off Friday, starting the process of deleting $85 billion from federal spending from the Pentagon and non-defense discretionary programs – which exclude entitlements like Social Security.

“These cuts are wrong. They’re not smart. They’re not fair. They’re a self-inflicted wound that doesn't have to happen,” President Barack Obama warned shipbuilders in Newport News, Va., on Tuesday, calling sequestration “a meat-cleaver approach to gut critical investments in things like education and national security.”

At the same time, House Speaker John Boehner, R-Ohio, told reporters in the Capitol that Senate Democrats should “get off their ass” and pass a bill that would soften the blow of sequestration without raising any taxes. And Senate Democrats and Republicans caucused to develop their strategies on how to handle this week’s last-minute debate.

“You have, as usual in Washington, a large Kabuki going on about who can get blamed,” U.S. Sen. Claire McCaskill, D-Mo., said on Fox News Sunday – a reference to the political posturing by both Republicans and Democrats.

“We will vote on something this week,” said McCaskill, predicting that Democrats will propose “a balanced approach. It will do both spending cuts, and it will close some loopholes – some really important loopholes that need to be closed just from the sense of fairness in our tax code.”

But congressional Republicans – noting that taxes already have increased this year as a result of the “fiscal cliff” deal in January and the expiration of the payroll tax break – accuse Obama and Democrats of failing to tackle excessive federal spending.

“It’s almost like the administration was given a homework assignment 18 months ago and they showed up last week saying, ‘Gee, we’re not ready for this,’” said U.S Sen. Roy Blunt, R-Mo., after emerging from a Senate GOP caucus on Tuesday afternoon.

U.S. Rep. Ann Wagner, R-Ballwin, said Obama “has already raised taxes on all Americans last month, and no one should be talking about raising taxes when the government is spending billions on wasteful projects.”

Is March 27 a more important deadline?

In contrast to a government shutdown, the sequester is more akin to a slowdown. It will be implemented differently by various federal agencies.

For example, some agencies will trim their budgets through furloughs – requiring some workers to take days of unpaid leave – which could, in turn, lead to service cutbacks or delays that could affect Americans seeking quick tax refunds, applying for passports or waiting in line for airport security checks.

Rather than Friday’s sequester initiation, some in Congress regard March 27 as the more significant deadline for pain because that is the date that the continuing resolution – which keeps the government funded – is set to expire.

Between now and March 27, Congress must either extend spending with another continuing resolution or come up with a spending plan to keep the government going. If not, the slowdown would be transformed into a government shutdown.

Whether or not Congress reaches a sequester modification deal this week, many lawmakers think a plan can be developed by the 27th. That spending bill might, for instance, include a retroactive provision to give the Pentagon and other federal departments more flexibility in how they implement cutbacks.

The choices facing lawmakers are misleadingly simple. Republicans could agree to close some unpopular tax loopholes – such as tax breaks for Big Oil – as part of a compromise plan. Democrats could jettison such revenue increases but agree to a more logical spending plan that would meet the sequester levels. Or the White House might agree to a plan to overhaul some entitlements in return for a deal to delay the sequester again.

The spending cuts are going to happen,” Blunt said Tuesday. “The option now for the president is: Do you want to work for a different way for these same savings to be achieved? That’s doable. There’s a lot of willingness to look for ways to have targeted spending cuts instead of across-the-board spending cuts.”

For her part, McCaskill said that “there is no question that these cuts are going to be painful and they are thoughtless.” Agreeing Sunday with U.S. Sen. Tom Coburn, R-Ok., that Congress needs to cut spending, McCaskill asked:

“Why is it that we can't come to the table and agree what cuts need to happen? That's what we should be doing. We shouldn't be passing the blame to the executive branch, or saying this is Obama's sequester.”

But Wagner, reflecting GOP talking points echoed by others, accused Obama of waging an “endless campaign to raise taxes and grow the government.”

Will impact be as harsh as White House claims?

In his appearances around the country and in the White House state-by-state analysis of potential impacts of sequestration, Obama has painted a dire picture of what may happen if Congress fails to act.

“Instead of cutting out the government spending we don’t need – wasteful programs that don't work, special interest tax loopholes and tax breaks – what the sequester does is, it uses a meat cleaver approach to gut critical investments in things like education and national security and lifesaving medical research,” Obama said Tuesday.

“And the impact of this policy won’t be felt overnight, but it will be real. The sequester will weaken America’s economic recovery. It will weaken our military readiness. And it will weaken the basic services that the American people depend on every single day.

After the “fiscal cliff” deal reached on New Year’s Day, the sequester would dictate $85 billion in cuts from March 1 through the end of September. Half of those cuts would be from the Pentagon, the other half from other non-discretionary parts of the federal budget. Exempt would be programs such as Social Security, Mediaid, veterans benefits, pay for uniformed military personnel and several programs for the needy.

The spending cuts would phase in over the next couple of months, giving Congress some time to take action before the worst phase. Federal law requires at least a month’s notice before furloughs are carried out, although hiring freezes could occur immediately. A slowdown in government contracting is also likely to happen quickly.

The first day furlough notices would be likely sent to individual federal workers is Monday, meaning that the first such unpaid leaves could not be required until April 4 or later. But some agencies have said they plan to make cuts without furloughs.

While the White House predicts deep cuts in some federal education programs – such as a loss of special education funding and reductions in assistance for needy schoolchildren – they would not actually take place until the next fiscal year, after Sept. 30. (That’s because the Title I assistance and disabilities funding are funded in advance and already are covered for the current school year.)

As for the Pentagon's cutbacks, the White House put out some rough numbers, but outside budget analysts say the exact impacts of the reductions are still unclear. A senior fellow at one defense think-tank told Politico that the prediction problem boils down to:

“You take a stream of assumption after assumption, multiply it by an assumption, or divide it by an assumption.”