Sequester: where from here?

4 Mar

sequester-arguing-sizedWith sequestration (let’s call it budget cuts) chugging along, Congress will be watching the public reaction and how the politicians respond may depend largely on the feedback they receive.

If the American people don’t notice it, it continues.

If they do, this gets resolved.

Here is how the policy and politics of the budget cuts could play out.

Revisit sequestration

If there is an overwhelming number of angry, pissed off Americans that lights up the phones across the Capitol, Congress could be forced to make a genuine attempt at bipartisan negotiations to come to a mutually agreeable solution.

In the finger-pointing over the last few weeks, both sides traded alternatives that they knew would be dead on arrival in the Senate without any effort to work together.

The next obvious point at which lawmakers might revisit sequestration would be when they consider how to keep the federal government-funded past March 27th, when the current continuing resolution expires.

Oops, Congress plans to be adjourned that week, giving them just 2 and a half weeks to figure out a plan.

If it determines the across-the-board cuts can’t stick, the next question for both sides to grapple with is whether to try to make them more manageable, substitute them for other cuts, or push them off.

Give the agencies flexibility

There’s a push, mostly by Republicans, to give the impacted agencies and departments more flexibility to manage the cuts – particularly regarding defense and veterans’ programs.

In the House, the GOP is trying to tie the flexibility to a package with another continuing resolution to fund the government for the rest of the fiscal year.

But the White House and many Democrats have rejected that idea.

Some on the President’s side say such a move would only push the blame for the sequester onto Obama and the Democrats, not a politically happy solution.

Still, there could be some movement this direction, if members begin to get desperate.

But the real unknown is whether Congress would be willing to give that much power to the executive branch, or even if the President wants it for political reasons.

Create substitute cuts

Congress could decide to substitute the sequester cuts for others that are more practical and acceptable.

But this would require one side or the other – or both – to shift their so-far inflexible positions.

Republicans say they have a hard time seeing Obama dropping tax gains as a requirement for an alternative, and Democrats are not expecting Republicans to cave on revenues unless they do so in the context of a larger deal.

Obama has said his previous offers to negotiate a so-called grand bargain, which included ideas like recalculating the inflationary costs of Social Security through “chained CPI,” remain on the table.

But at this stage, no one sees the ground shifting toward a larger deal in the short-term.

Stop the cuts for 2013

If public outrage is strong and lawmakers decide to stop the pain but can’t negotiate a substitute, they could attempt to put off the cuts – at least for the rest of the year.

Of course that solves nothing – just saves it for another day.

Some say this is a likely scenario, because the longer the cuts stay in effect the more members of Congress are getting pressure back home.

The fact is – there’s no deficit-reduction alternative that is acceptable, so at that point, canceling it becomes the most likely option for only 2013.

Congress would simply develop some vehicle to delay the cuts for this year.

The other option is that they don’t do anything, and they just struggle with each other politically for a month or two and then give up and pass some sort of short-term event that does nothing.

Let the sequester stand

If the public reaction doesn’t show up, or if support grows for taking some bold action to harness spending, or if lawmakers make an attempt to tweak the sequester but fail to come to an agreement, the cuts could very well end up staying in place.

Given the gridlock in Congress, this could well be how it turns out.

After all, when sequestration was devised as part of the 2011 debt-ceiling deal, no one believed it would actually happen.

Congress is always such a surprise.

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