Both Parties Prepare to Fight Over Sequester

Posted July 29, 2012 at 2:00pm

There’s no doubt that in the coming months, lawmakers will issue breathless warnings about the looming “fiscal cliff.” But what is in question is who will win a policy and political battle that’s played out in déjà-vu-like ways during the past two years — if anyone can win at all.

Although sequestration, the automatic across-the-board discretionary spending cuts set to kick in starting in January, is the name of the current game, Democrats and Republicans are preparing to articulate their differences using talking points on revenues and spending cuts they’ve honed this Congress through a series of fiscal crises largely of their own making.

And with relatively few legislative days left between now and the elections, and very little feasible legislation to be done anyway, lawmakers will yet again spend most of their energy talking about revenues, spending cuts and fiscal solvency. They’ll also try to demonstrate to the American people that they’ve learned something from the multiple crises along the way.

“I’m here to say you’re the commander in chief, not me. You should be leading this charge, not me. I will be a willing partner to any Democrat, including the president, to fix this,” said Sen. Lindsey Graham (R-S.C.), a leading opponent of the $500 billion defense sequester, last week at a Foreign Policy Initiative event.  “Yes, I’m willing to put revenues on the table, but we’re not going to increase tax rates.”

In one statement, Graham — who voted against last summer’s Budget Control Act that put into motion the sequester — demonstrated the tack the GOP will use going forward, according to sources. They will show enough flexibility on revenue to say they’re operating in good faith while also trying to put the burden on the president.

Republicans, including the 28 in the Senate and 174 in the House who voted for the sequester, have done a good job to date arguing against the defense cuts, using top Obama administration officials such as Defense Secretary Leon Panetta to bolster their case.

But Democrats are beginning to fight back, too, making sure to draw attention to the domestic side of the cuts as well, which could affect social programs that are the base’s bread and butter. There’s still some residual frustration on their part on what the party has given up in high-level negotiations, such as agreeing to a cuts-only approach to raising the debt ceiling and avoiding a government shutdown, while not getting much in return for other big concessions.  Those other concessions include extending the Bush tax rates in the last lame-duck session.

Democratic sources swear they’re not going to do it again, arguing that they can force the GOP to include revenue in a substantive way.

“What you’ve seen over the last 10 days is that Democrats have been consistent about wanting to avoid the sequester and wanting to avoid the fiscal cliff, but as long as Republicans put revenues on the table,” said one Senate Democratic aide, who pointed to last week’s tax-cut vote as an important turning point in the overall budget negotiations.

“The best way to move on the sequester is for the House to agree to our tax bill,” the aide continued.

The Senate approved a tax bill last week that would extend the current rates for 98 percent of Americans while letting the expiring tax breaks for the top 2 percent of earners expire. The Joint Taxation Committee estimated on Friday that allowing the breaks on the wealthiest 2 percent of Americans to expire would save the government $155 billion over 10 years as opposed to re-upping the tax cuts for everyone.

In a July 16 speech at the Brookings Institution, Sen. Patty Murray (D-Wash.), the former chairwoman of the super committee, stressed that Democrats were no longer willing to bend without the inclusion of revenues in any deal.

“So if we can’t get a good deal, a balanced deal that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013 rather than lock in a long-term deal this year that throws middle-class families under the bus. And I think my party, and the American people, will support that,” Murray said. “Anyone who tells you sequestration is going to simply disappear because both sides want to avoid it is either fooling themselves, or trying to fool you. It is going to have to be replaced, and that replacement is going to have to be balanced.”

Depending on who wins in November, however, waiting until January could be a risky endeavor for Democrats.

Republicans will continue to push the idea that the defense sequester will be devastating to U.S. armed forces, continuing the time-tested GOP narrative that their party is stronger on national security. Moreover, the $500 billion in cuts is likely to play a large role in potential swing states such as Virginia and North Carolina, which went to Obama in 2008 and are home to many military bases and contractors. In North Carolina alone, the defense industry accounts for 7 percent of the state’s gross domestic product and generates $23 billion annually, according to one of the state’s economic development commissions.

In the end, however, it seems the fear of replaying the battles of this last Congress blow-for-blow, and conceding yet again, might be stronger than the fear of losing the defense-only argument. Sources suggest Democrats are bound and determined not to repeat the outcome of the last lame-duck session, where all they ostensibly got in exchange for extending the Bush tax cuts was another tax cut in the form of the payroll tax holiday.

Niels Lesniewski contributed to this report.