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February 27, 2013

ANALYSIS: Potential budget ‘sequester’ was put in place months ago

TERRE HAUTE — Republicans and Democrats are bracing for the “sequester” – automatic spending cuts set to take effect Friday – by putting very different faces on what it means and who’s to blame.

Many Republican, conservative and libertarian sources are playing down the potential impact of sequestration. Many Democratic and liberal sources are playing it up. Meanwhile, the GOP and Democrats are equally split on who is responsible for the looming sequester.

The bulk of the automatic spending cuts that make up the “sequester” were part of the Budget Control Act of August 2011. The BCA called for the cuts – totaling $1.2 billion over nine years – to take effect if a bipartisan, congressional “supercommittee” didn’t find its own $1.2 trillion in cuts by Nov. 23, 2011. The “supercommittee” deadlocked along party lines, failed in its task, and the sequester train left the station.

The 2011 BCA sprang from Republican reluctance to agree to another increase in the so-called “debt ceiling,” an overall indebtedness limit Congress periodically places on itself. Eventually, Congress voted to boost the debt ceiling by $1.2 trillion as long as the supercommittee was formed. Republicans also insisted that they preserve the threat to sequester on Jan. 2, 2013, if the supercommittee failed to find its own cuts — which it failed to do.

As it stands, the sequester would focus most cuts on “discretionary” congressional spending – which basically means everything except the big entitlement programs of  Social Security, Medicare and Medicaid.

The “sequester” was set to take effect with the New Year. Remember the “fiscal cliff” America was facing as 2012 ended and 2013 began? The “cliff” was a combination of tax increases and big budget cuts. In a last-minute deal, Congress and the president agreed to avert the “fiscal cliff.” Their agreement consisted of postponing the spending cuts (the sequester) while agreeing to about $620 billion in new taxes. Instead of a full “fiscal cliff,” we were left with just a half a cliff.

Many Republicans felt they lost the game of chicken at the edge of the fiscal cliff because they agreed to higher taxes without getting spending cuts. Now they are in no mood to accept new taxes in any deal to avoid sequestration. Democrats, on the other hand, don’t want to accept big cuts in mandatory spending programs without new tax hikes.

Even if the two sides could agree to trim mandatory spending, Republicans and Democrats have different ideas for how to do that. The GOP favors allowing competition to bring down health care costs, but Democrats would rather curb fees to drug companies, hospitals and find new ways to deliver health care.

As a result, any last minute deal to avoid big cuts in discretionary spending by Friday looks unlikely.

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com

 

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