Just four days remain until Friday’s start date for federal spending cuts that were supposed to be too painful to ever let happen, but lawmakers return to Washington on Monday with little hope for an eleventh-hour deal to avert or reshape them—or any let-up in the fighting over who is to blame.
Sequester week has finally arrived. Most of the $85 billion in reductions set to thump almost every area of government will be stretched out over the remaining seven months of this fiscal year. But impacts on the economy, government services, and programs could become evident within weeks, and hundreds of thousands of federal workers could face furloughs by April.
As Congress and President Obama focus on what type of political settlement might still be reached—and how this might mesh with upcoming action needed to keep government funded—lawmakers will wrestle this week with other controversial matters:
- The Senate is expected to vote as early as Tuesday on the confirmation of Obama’s nominee for Defense secretary, former GOP Sen. Chuck Hagel of Nebraska, even as some Republicans continue urging the president to withdraw the nomination.
- The House is expected to act on a bill reauthorizing the Violence Against Women Act. A Rules Committee hearing is set for Tuesday on an amended version of the Senate-passed bill, and a floor vote is anticipated later in the week. The Senate’s bills last session and this year have been passed with bipartisan votes. But they have met with opposition from House Republicans, who object to provisions giving explicit new protections for classes of people based on sexual orientation and new authority to tribal courts to prosecute abuse cases against those who are not Native Americans. Sen. Patty Murray, D-Wash., said the House bill unveiled Friday “is not a compromise.” Each side has accused the other of playing politics with legislation Congress first passed in 1994 and has reauthorized twice with bipartisan support.
- The Senate Intelligence Committee will continue to consider—and may vote on—Obama’s nomination of John Brennan to be director of the CIA, though he will likely continue to face questions over the constitutionality of drone strikes. Closed hearings have been set for Tuesday and Thursday.
But it’s the sequester cuts and their looming impact that will be the main focus of lawmakers’ attention this week. For instance, the Senate is expecting this week to hold a floor vote on a Democratic bill that would help pay down the sequester’s total by repealing tax loopholes for oil companies, eliminating some farm-industry subsidies, and resurrecting the idea of a new minimum tax rate on those who make more than $1 million annually.
But Republicans say they will not go along with replacing the cuts with new revenues, and they emphasize that they have passed plans (though not this session) to substitute other cuts for those now set to hit defense and domestic discretionary spending evenly.
Amid this stalemate, a scramble to affix political blame has begun. Republicans claim the White House came up with the sequester idea in the first place and has failed to do anything to avert it. The White House in turn accuses Republicans of failing to seize opportunities for compromise and has taken to underscoring the damage that sequestration will bring. For instance, Obama and Vice President Joe Biden on Monday are addressing the National Governors Association at the White House; on Tuesday, Obama will travel to Newport News, Va., for a speech at Newport News Shipbuilding to talk about the impact of the sequester on the defense industry.
But sequestration is, in fact, a default plan contained within the 2011 Budget Control Act, which was supported that year by Obama and leaders in both parties and then passed by both chambers. The plan was to match debt-ceiling increases with deficit reduction.
The idea behind including such sweeping cuts was that they would be so harsh and onerous to both parties that the bipartisan so-called super committee would certainly be able to agree on a better plan to cut $1.2 trillion over the next decade. But it failed to do its job.
Despite the rhetoric and the lack of signs heading into this week of a bipartisan agreement to preempt the cuts, some lawmakers aren’t so certain a last-second deal won’t be reached. Some have even scrapped their scheduled weekend events in their districts on the chance they could be in Washington, taking action on just such a settlement.
BUDGET AND SPENDING
Time Runs Out On the Sequester
The $85 billion in cuts set to begin on Friday are just the first installment of the sequester’s $1.2 trillion in across-the-board reductions over the next decade. These first-year cuts were supposed to hit on Jan. 1, but lawmakers were able to delay them until March 1 by finding other specific cuts and some new revenue, thus bringing the total left to be cut this year down from $109 billion.
These cuts to military and domestic discretionary spending are to be carried out over the next seven months—by the Oct. 1 start of the new fiscal year—and the impacts won’t be seen immediately. But the Congressional Budget Office has projected they could eventually cost 750,000 jobs in 2013 and reduce the gross domestic product by half a percentage point. Federal agencies have been in the planning stages for the sequester for months.
Few congressional staffers expect movement on a deal by the end of the week. Even so, some resolution that replaces or softens the sequestration cuts could still come within a few weeks as part of talks to keep the entire government funded through the end of the fiscal year. A current stopgap government funding bill expires at the end of March.
Hagel Vote Looms
After whirlwind controversy and a delay, the Senate has scheduled a vote on Tuesday to end debate on Hagel’s nomination, setting up a path for him to squeak through confirmation and become Defense secretary. The White House was hoping for a vote to confirm him before the Senate recessed, but Republicans blocked that push, in effect forcing current Secretary Leon Panetta to attend a NATO defense ministers meeting in Brussels.
Sequestration will also be a hot topic in the defense world this week, since Panetta formally notified Congress last week of the Pentagon’s plans to furlough civilian workers this year if the automatic defense cuts take effect on March 1. Most of the department’s 800,000 civilian employees now face up to 22 days of unpaid leave if the first tranche of the sequester’s $85 billion in cuts go into effect.
ENERGY AND ENVIRONMENT
Obama is expected this week to make a joint announcement nominating his picks for Energy secretary and Environmental Protection Agency administrator. MIT nuclear physicist Ernest Moniz is believed to be the front-runner to head the Energy Department; Gina McCarthy, who heads EPA’s clean-air and climate-change program, is said to be a lock to lead that agency.
The nomination of McCarthy, in particular, would be a clear sign that Obama is moving forward with his plan to roll out climate-change regulations this year if Congress does not act. It would also set in motion what’s sure to be a fiery confirmation hearing, as Senate Republicans, led by Environment and Public Works Committee ranking member David Vitter of Louisiana, prepare to make life difficult for the woman who would become the nation’s chief regulator of fossil-fuel pollution.
Debate Heats Up
Guns will continue to be a subject of intense debate this week on both sides of the Capitol.
On Wednesday morning, Sen. Dianne Feinstein, D-Calif., will chair a Senate Judiciary Committee hearing on her bill to ban more than 150 types of firearms. On the House side, the Judiciary Committee has no hearings on gun control scheduled, but Chairman Bob Goodlatte, R-Va., promised that legislation will be considered soon.
Look for health care to play heavily in the Senate Budget Committee hearing on the newest CBO outlook on Tuesday. Slowing health care costs can take credit for much of the deficit reduction in the newest projections, and CBO just put out a blog post explaining why they’ve made big downward revisions in their health spending forecasts.
Also Tuesday, the House Ways and Means Health Subcommittee will be looking at alternatives to Medicare’s benefit design. The hearing is likely to focus on the possibility of merging Medicare Parts A and B, a proposal with many supporters. Of course, that could be a plan that saves no money or a lot of it, depending on how premiums and deductibles are restructured.
On Wednesday, the House Energy and Commerce Health Subcommittee will be talking about how to reduce health care waste, fraud, and abuse, one cost-cutting strategy that Democrats and Republicans tend to agree on. The Obama administration recently put out a report detailing its record fraud recoveries to the Medicare Trust Fund. But critics say there’s still a lot of room for improvement in reducing fraud in the public programs.
The focal point of immigration reform in Congress this week is expected to be the joint statement of principles issued last week by the AFL-CIO and the U.S. Chamber of Commerce, which said: “We have found common ground in several important areas, and have committed to continue to work together and with members of Congress to enact legislation that will solve our current problems in a lasting manner.”
Many details still need to be worked out, but a key concession in the statement was recognition by both labor and business that there are times, even in a slow economy, “when employers are not able to fill job openings with American workers.”
The two groups suggest Congress needs to create a new kind of data-driven visa program that assesses labor shortages and determines when foreign workers should be brought in to fill jobs.
At least one member of the so-called “Gang of Eight” senators working on immigration reform—Republican Marco Rubio of Florida—was supportive of the idea. “An effective guest-worker program is a key principle agreed to by the bipartisan group of senators, and we are working out details in the ongoing Senate discussions,” Rubio’s spokesman said in a statement.
A vocal critic of new worker-visa programs, Sen. Jeff Sessions, R-Ala., skewered the chamber-labor joint statement almost as soon as it was issued on Thursday. “Surely the chamber hasn’t abandoned belief in the power of the market,” he said. “Such a visa program is certain to take jobs from American workers and depress wages.”
Expect lots of focus by Obama this week on the looming sequester. While his aides work behind the scenes to head it off, the president will be warning of its consequences in public.
That will come Monday, when he and Biden address the National Governors Association at the White House. Then on Tuesday, he will take the message on the road, going to Virginia for a speech at Newport News Shipbuilding to talk about the impact of the sequester on the defense industry. On Wednesday, the impact on business and the economy will be talked about when he addresses the Business Council dinner in Washington.
The public schedule for the end of the week is pretty open, allowing him to be more involved in any last-minute sequester talks.