House Budget panel defeats Democrats’ proposal for revenues to head off automatic cuts.
Legislation is advancing to require the White House to disclose details of how agencies -- in particular the Defense Department -- are planning for the possibility of mandatory across-the-board budget cuts. The movement comes during a week when fears of the 2011 Budget Control Act’s sequestration threat have prompted discussions throughout Washington.
On Wednesday, the House Budget Committee voted unanimously to approve the Sequestration Transparency Act, which passed the full Senate on June 21 as part of the massive farm bill.
The bill, sponsored by Reps. Jeb Hensarling, R-Texas, and Budget Chairman Paul Ryan, R-Wis., would require the president to submit a report to Congress within 30 days that includes the basic details of the looming sequester and the actions to be undertaken. The Senate companion bill was sponsored by Sens. John Thune, R-S.D., and Jeff Sessions, R-Ala.
The Office of Management and Budget has declined requests to provide such information, and House Republicans claimed at the Wednesday markup that Budget Director Jack Lew told Defense Secretary Leon Panetta not to assume that a budget deal will be struck before the sequester kicks in on Jan. 2, 2013.
“There is strong, bipartisan agreement that the sequester is bad policy and should be reprioritized,” Ryan said. “That’s why House Republicans passed legislation last month that would replace these crippling cuts with common-sense reforms and spending reductions. Unfortunately, we have not seen action from the Senate and the White House has not put forward a specific proposal.”
OMB Communications Director Kenneth Baer said in a Wednesday email to Government Executive: “When bipartisan majorities voted for the Budget Control Act and the president signed it into law, we all agreed that the sequester would be, by design, destructive both to defense and nondefense programs. Congress should do its job and pass a balanced plan for deficit reduction as it was charged to pass under the Budget Control Act so that we can avoid the sequester.”
He added, “should it get to a point where it appears that Congress will not do its job and the sequester may take effect, we will be prepared. While OMB has not yet engaged agencies in planning, our staff is conducting the analysis necessary to move forward if necessary.”
Before approving the transparency bill in a bipartisan vote, the panel rejected by a vote of 10-18 a substitute plan offered by ranking member Rep. Chris Van Hollen, D-Md. It would have moved beyond extracting information from OMB and proceeded directly to heading off sequestration for a year through a “balance” of spending cuts and revenue raisers. Those would have included cutting farm support payments and eliminating tax breaks for major oil companies and the so-called [Warren] Buffett rule requiring millionaires to pay at least 30 percent of their income in taxes.
“It is not possible to reduce the deficit and meet our obligations without some revenue,” Van Hollen said. “There is bipartisan agreement that the arbitrary buzzsaw approach of sequestration would be bad for the country. But it’s not just defense” that would suffer, he said, mentioning the FBI, a federal police hiring program, border security, food safety, education and cancer research.
Van Hollen cited recent statements by House Armed Services Chairman Howard “Buck” McKeon, R-Calif., and Sen. John McCain, R-Ariz., that a deal should be struck soon, and given a choice between sequestration and some form of revenue raiser, they’d choose the latter.
There followed more than an hour of philosophical debate on growing the economy, the role of government, fighting for the middle class and legislative rules.
The Democratic plan violated House rules, Ryan said, because revenue measures must originate in the Ways and Means Committee and a farm policy issue should be taken up in the agriculture panel. “The bill is bad policy that will slow economic growth and take pressure off Congress to cut spending,” he said. “Tax rates matter, and we can’t tax our way out of these problems.”
Ryan and other Republicans argued that growth and prosperity come not from gaining more power in Washington but from letting Americans keep more of their money. “We’re going to have one last chance in this country to avoid a European-style debt crisis,” he said. Others chided President Obama for not offering a sequestration plan.
Van Hollen and Democrats countered that while details from OMB on planning would be “useful,” the real issue is arriving at a “balanced” deal on taxes and spending for deficit reduction, which is consistent with Obama’s 2013 budget. Van Hollen introduced his amendment at Wednesday’s budget panel markup, he said, because House leaders prevented a vote on the plan during consideration of their budget resolution, waiving chamber rules when they needed to.
Rep. Bill Pascrell, D-N.J., taunted Republicans for passing a budget that gives tax breaks to sports teams and hedge fund managers while cutting block grants for such programs as Meals on Wheels. “Where in God’s name are your priorities?” he asked.
A panel of experts at the Brookings Institution examined approaches to heading off sequestration Tuesday, when the consensus was the Pentagon needs more time for a reflective reduction in spending and the automatic cuts of 10 percent or 15 percent actually would be more expensive than thought because they would mean canceling pending contracts.
Steve Bell, senior director of economic policy at Bipartisan Policy Center and a former Senate Budget Committee top Republican aide, called sequestration “stupid fiscal policy, stupid defense policy and stupid economic policy. I can’t imagine a more fragile time to be doing silly things with serious subjects,” he said. The impact of the scheduled sequester, Bell said, already started when the Congressional Budget Office and the Federal Reserve recently lowered their economic forecasts.
Whatever OMB decides to do, he added, recalling planning for automatic cuts in the mid-1980s, it will “go down to the lowest level of appropriations bill,” such granular items as fuel for Air Force aircraft, while agencies will be forced into furloughs or even layoffs.
Peter Singer, director of Brookings’ 21st Century Defense Initiative, criticized what he called “operation hysterical ostrich,” or the approach of fomenting “maximum level of panic at the Defense Department while deliberately not planning or preparing.” In actuality, he said, sequestration has the same potential likelihood as the United States invading Canada, a scenario for which contingency plans existed for decades.
McKenzie Eaglen, resident fellow in security studies at American Enterprise Institute, predicted Congress would find a way around this and that the “Pentagon will get flexibility and it will never come down to program level.” Her talks with Republicans in Congress, she said, show that “it’s not all doom and gloom, that most do want a grand bargain,” even on revenue raising, but they are not talking publicly. She predicted lawmakers would “dust off” some of the rejected ideas from the various fiscal commissions such as Simpson-Bowles, Rivlin-Domenici, the super committee and the Gang of Six.
Thomas Davis, vice president for strategic planning at General Dynamics Corp., warned that the Office of the Defense Secretary and its controller have no experience or standard operating procedures for automatic cuts. “This catastrophic legislative accident could happen unless there’s a great degree of leadership and attention,” he said. Davis and others said they hoped Congress would give the Pentagon a chance to “do the legwork” by delaying sequestration “long enough to make [the process] informed.”