Democrats Want Leverage From Sequester

Party Members See Little Risk in Waiting Out Republicans

Posted July 15, 2012 at 2:00pm

Senate Democrats see no political downside to leaving the issue of $1.2 trillion in automatic spending until after the November elections, as they try to use the cuts as leverage with Republicans to negotiate on tax increases on the wealthy.

“We structured the sequester in a way that would be more comfortable for us than for Republicans,” a senior Senate Democratic aide said, referring to the cuts by their technical name. The cuts, which are set to begin next year, are nearly evenly split between defense and domestic spending but do not affect Democratic priorities, such as Social Security and Medicaid.

“We don’t see the heightened sense of concern as a problem; it could help get Republicans to the negotiating table,” another Senate Democratic aide said. “The sequester could yet fulfill the purpose it was meant to serve.”

Indeed, the sequester, which was part of last August’s debt limit deal, was triggered by the failure of last year’s super committee to reach agreement on a $1.2 trillion deficit-reduction plan. The threat of such harsh cuts was intended to provide an incentive for House and Senate lawmakers to come up with their own comprehensive plan.

But that didn’t happen, and Republicans have been warning that defense contractors are expected to give layoff notices as a result of the sequester sometime before the elections, a scenario that will be ripe for political saber-rattling.

Republicans disagree that there will be no political fallout for Democrats, noting that President Barack Obama’s re-election strategy includes victories in Virginia, North Carolina and Ohio — all of which have military bases that could be affected by the sequester.

“Waiting us out is bad governing,” a Senate GOP aide added. “This is why everyone in America is ready to try someone new” as president.

A senior House GOP aide said, “Playing chicken with America’s national security and the economy is phenomenally irresponsible.”

On Friday, Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.) and Senate Minority Leader Mitch McConnell (R-Ky.) wrote to Obama decrying the Democratic strategy.

“The sequester will have a significant impact on our national security and other domestic programs — such as medical research and special education — and yet the White House is now holding our troops and other important programs hostage in order to foist tax increases on small businesses, which have been routinely rejected by the House and Senate on a bipartisan basis,” the letter said. “Instead of ignoring the need to address this critical issue, we would respectfully request that you and your senior staff engage constructively with both parties to find common ground.”

“To be clear, we stand ready to work with you to identify and enact common-sense savings necessary to replace the January 2013 sequester,” the letter continued. “Rather than proposing to simply put more space between this problem and the election or offering tax increase proposals that face bipartisan Congressional opposition, we hope you instead work with us to find a bipartisan solution before the [Sept. 30] end of the fiscal year.”

Democrats and the president have said Republicans need to accept the cuts or broker a deficit-reduction deal that includes tax increases, a position that hasn’t changed since their negotiations on the super committee. Democrats believe that their message calling for the wealthy to pay more in taxes strikes a chord with middle-class voters, and in some cases, polling has backed them up.

In a letter last week to the House Armed Services Committee, Senate Majority Leader Harry Reid (D-Nev.) underscored the Democrats’ position, which also includes extending the 2001 and 2003 Bush-era tax cuts only to households making less than $250,000 a year.

The purpose of the sequester “was to force the hard choices necessary to address our nation’s long-term fiscal challenges in a balanced and fair manner,” Reid said.

“Unfortunately, so far, Republican leaders have refused to make the difficult decisions necessary for a compromise,” he continued. “Instead, Mitt Romney and the congressional GOP leadership have fallen in line behind Grover Norquist, the radical lobbyist who opposes closing even the most outrageous corporate loopholes to reduce the deficit. In fact, not only has the GOP leadership refused to ask special interests, millionaires and billionaires to pay their fair share, now they are demanding even more budget-busting tax breaks for those who need them least.” (Norquist heads the conservative Americans for Tax Reform.)

“Sequestration was designed to overcome such ideological extremism,” Reid said. “And I am convinced that, in time, it will.”

Still, some Members are involved in discussions to find an agreement on replacing the sequester for fiscal 2013 to spare the military and the jobs that could be lost.

“We are just talking about process questions at the moment. We haven’t gotten to the substance yet,” said Senate Armed Services Chairman Carl Levin (D-Mich.), who is involved in the discussions. “We are just trying to come up with a process for addressing the sequestration issues.”

“Revenues are going to have to be on the table, there is no doubt about that,” he said. “There is just informal discussion going on, lots of them.”

Armed Services ranking member John McCain (R-Ariz.), Sen. Lindsey Graham (R-S.C.) and Senate Budget Chairman Kent Conrad (D-N.D.) are also pushing for a solution.

Graham sees this fall’s continuing resolution as a likely vehicle for a plan that he agrees will have to include taxes. Lawmakers have already conceded that a CR will likely be needed to keep the government funded beyond Sept. 30.

“Is it OK to eliminate a deduction in the tax code, take that money, pay down debt or save the Defense Department from destruction? The answer, to me, is yes,” Graham said.

Senate Democrats hope that he can convince other Republicans to go along.