THE RESET: Deal to delay spending cuts in doubt

Tom Raum

Asso­ci­ated Press

Chances seem to be dwin­dling for a deal in time to avert deep, auto­matic gov­ern­ment spend­ing cuts from begin­ning on March 1. The Republican-controlled House remains at log­ger­heads with the Democratic-led Sen­ate and Pres­i­dent Barack Obama over key issues.

With no top-level talks under way and Con­gress off until next Mon­day, each side is blam­ing the other.

The so-called sequester cuts “won’t help the econ­omy, won’t cre­ate jobs, will visit hard­ship on a whole lot of peo­ple,” Obama said Tues­day. “Con­gress didn’t come together, do their jobs. And so as a con­se­quence we’ve got these auto­matic, bru­tal spend­ing cuts that are poised to hap­pen next Friday.”

Obama wants both more tax rev­enues and spend­ing cuts.

Con­gres­sional Repub­li­cans oppose fur­ther tax hikes. “Just last month, the pres­i­dent got his higher taxes on the wealthy and he’s already back for more,” says Repub­li­can House Speaker John Boehner.

The sched­uled cuts would trim roughly $85 bil­lion from mil­i­tary and domes­tic spend­ing in this bud­get year. Spend­ing on Social Secu­rity, Medicare, Med­ic­aid and other “enti­tle­ment” pro­grams would be spared.

One rea­son there’s lit­tle progress toward a deal is that there’s yet another dead­line ahead— March 27, when a tem­po­rary bud­get agree­ment expires and Con­gress must scram­ble to find funds to run the entire government.

Dur­ing those nego­ti­a­tions next month, the most dam­ag­ing auto­matic sequester cuts could be repealed or soft­ened, the think­ing goes. That effec­tively buys more time. And law­mak­ers sel­dom miss chances to put things off.

Mean­while, deficit hawks Alan Simp­son and Ersk­ine Bowles are offer­ing a new deficit-reduction plan they see as a pos­si­ble com­pro­mise for Democ­rats and Republicans.

It com­bines rewrit­ing the tax code — to elim­i­nate many deduc­tions — with deep spend­ing cuts for some $2.4 tril­lion in deficit-reduction over 10 years.

Of the cur­rent impasse, “everybody’s at fault,” says Simp­son, a Republican.

“Not only do we not have a long-range plan, we don’t even have a bud­get,” says Demo­c­rat Bowles. “We’re oper­at­ing this coun­try on a month-to-month basis.”

Posted by Matt Echelberry on Feb 19 2013. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.