“I have no doubt that there will be efforts to turn it off,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. “Never underestimate the willingness of politicians to try to avoid making some of the hard choices.”
It’s unclear how successful such an effort would be. Not only would an Obama veto be tough to overcome, but pressure from the financial markets on politicians to rein in the government’s huge budget shortfalls could keep lawmakers from easing the automatic reductions.
The automatic cuts, enacted in this summer’s debt-limit deal between Obama and congressional Republicans, were designed to be so distasteful that they would add pressure on the supercommittee to craft a compromise.
“I would have hoped it would have been a deterrent to those who have taken an oath to Grover Norquist that defense of our country” is less important than tax cuts, House Minority Leader Nancy Pelosi, D-Calif., said Nov. 18, in a dig at Republicans who signed a pledge from the conservative activist to not raise taxes.
But with prospects dimming for a bipartisan accord by the supercommittee on a deficit-reduction package by this week’s deadline, it appears increasingly likely that members of Congress will have to live with the automatic cuts—or “sequestration”—that they built into the law. Little progress was made over the weekend as Democrats and Republicans traded barbs over which party was responsible for gridlock on the 12-member supercommittee.
And while lawmakers of all stripes agree that automatic, across-the-board cuts are no way to run the federal government, the threat hasn’t outweighed the differences between the six Democrats and six Republicans on the deficit panel. Democrats are demanding significant tax increases in exchange for savings from expensive benefit programs, while Republicans are refusing to accept such revenue boosts.
The debt-limit agreement requires automatic cuts of $1.2 trillion if the supercommittee produces nothing or if Congress fails to approve a package of that size by Christmas.
If the debt panel produces less than $1.2 trillion in savings, automatic cuts are activated to make up the difference. So $800 billion in savings from the supercommittee would trigger $400 billion in automatic cuts.
By law, 18 percent of the automatic savings are assumed to come from interest costs the government would save from reducing the debt. If the supercommittee fails completely, out of the $1.2 trillion in automatic savings, $216 billion would be assumed interest savings.
That would leave $984 billion in automatic spending cuts. They are supposed to start in 2013 and be spread evenly over the next nine years, divided equally between defense and domestic programs. That works out to around $55 billion annually each from defense and domestic programs.