GOP lawmakers see automatic cuts as leverage

WASHINGTON (AP) ? Driven by frustration over deficits and debt, Republican conservatives are pushing a politically risky move to permit painfully large automatic spending cuts to strike the Pentagon and domestic programs alike in an effort to force Democrats into making concessions on the budget.

It's a remarkable turnabout from last year, when GOP leaders were among the loudest voices warning of dire consequences for the military and the economy if more than $100 billion worth of across-the-board cuts were allowed to take effect. Now, even as defense hawks fume, Republicans see the strategy as their best chance of wringing cuts from costly government benefit programs like Medicare that President Barack Obama and his Democratic allies have been reluctant to touch.

The move is fraught with risk. Some $43 billion would be cut from the Pentagon budget between March and October if battling Democrats and Republicans can't agree on an alternative. Equal cuts would hit domestic programs, although the health care programs that are major drivers of future deficits are largely exempt.

"In terms of the political dynamic here, defense spending is only 20 percent of the federal budget, but it's taking 50 percent of the cuts, which means it's going to be hitting the Republicans a lot harder than the Democrats," said defense analyst Loren Thompson. "Most of the nation's big military bases and many of its defense factories are located in Republican strongholds like the South, so Republicans are hurting themselves more than the Democrats by insisting on going forward with sequestration."

The automatic cuts, known as a "sequester" in Washington-speak, are the penalty for the failures of the 2011 deficit "supercommittee" and subsequent rounds of budget talks to produce an agreement.

Along with the threatened expiration of Bush-era tax cuts, the sequester was a major element of the so-called fiscal cliff crisis that gripped the country as the new year dawned. While most of the tax cuts ? except for upper-bracket income ? were made permanent, negotiators could only agree on a two-month reprieve to the sequester after finding $24 billion in replacement money that reduced this year's round of cuts from $109 billion to $85 billion. Eight more years of cuts, totaling almost $1 trillion, still remain.

The austerity, economists say, would slow down the economy. Under a formula by the Congressional Budget Office, a $43 billion cut in defense spending could cost 300,000 jobs this year.

On Wednesday, the government reported that the economy shrank by 0.1 percent in the last quarter of 2012 and said a slowdown in defense spending and uncertainty over the automatic spending cuts could have kicked in at the start of the year.

Last year, Republicans issued dire warnings of the impact the cuts would have. Defense hawks like Sens. John McCain, R-Ariz., and Lindsey Graham, R-S.C., made campaign tours in political swing states like Virginia and Florida lambasting the cuts, warning that the reductions would hollow out the Pentagon and cost many thousands of jobs. They reminded voters that the sequester was an idea developed by Democrats during 2011 negotiations on increasing the government's borrowing cap.

"The White House is responsible for the 'sequester' that threatens our national security," House Speaker John Boehner, R-Ohio, said in September. "History has taught us we can't continue with policies that jeopardize our defenses or weaken our economy."

So twice last year, House Republicans passed legislation to replace this year's round of cuts with alternatives like curbing the growth of food stamps and requiring federal workers to contribute more to their pensions.

Democrats instead put their faith in year-end, high-level budget talks involving President Barack Obama and Boehner, but those talks failed. Later, successful negotiations between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., solved the tax issue but produced only the two-month fix for the sequester.

This year's GOP move to embrace the sequester was hatched at a recent strategy retreat for House Republicans in Williamsburg, Va. Much of the retreat was devoted to coming up with a way to solve a more urgent issue: finding a way to get the tea party-infused House to again increase the debt limit and prevent an economically devastating first-ever default on U.S. obligations. The party agreed on a strategy to punt the debt dilemma until May or later and instead use the sequester as leverage in the budget debate.

A senior House GOP aide, who spoke on condition of anonymity to discuss party strategy, said some Republicans see the sequester as their best opportunity to achieve spending cuts. That strategy, however, is rife with potential to split open the Republican Party and pits the defense hawks against the tea party.

"The world is blowing up. I can't imagine a more devastating signal to send to the Iranians and our enemies and our friends alike than to dismantle the military," Graham said. "In a body that's known for doing pretty dumb things, this to me wins the prize."

Such concerns, however, have been overruled by Republicans frustrated by a recent loss to Obama on the issue of higher tax rates and a $60 billion disaster aid bill to address Superstorm Sandy. The reality of the political firestorm that is sure to hit if the sequester kicks in doesn't seem to be a concern.

"These are the only cuts that we've been able to get from the president, and absent any other negotiations, I understand those who say, 'We're loath to give that up unless we come up with some substitute,'" said Sen. John Cornyn, R-Texas. "It's bad policy, there's no question about it. But the president could be part of the solution, and right now he's AWOL."

How people would actually react should the across-the-board cuts hit is anyone's guess. But it's not lost on anyone with institutional history that Republicans got creamed in a similar situation in 1995-96 when they sparked a partial government shutdown under the leadership of House Speaker Newt Gingrich, R-Ga.

"I'm just flabbergasted," said Scott Lilly, who was the top Democratic staffer on the House Appropriations Committee during the Gingrich shutdown. "The way they've played it, they're going to get a huge part of the blame because they're just openly accepting" the sequester.

With Pentagon uniformed military salaries exempt, the cuts to the rest of the agency are more severe, with big impacts on defense contractors and civilian Pentagon workers.

"I just don't think there's any appetite at this point in the Republican conference to 'fix' the sequester," said GOP lobbyist Jack Howard. "You have to wait until it actually hits, I think. And then we'll see."

On Tuesday, Senate Majority Harry Reid, D-Nev., said the warring parties should try to figure it all out, but he set up a clash with Republicans over using new taxes to fix the problem.

Reid said the sequester cuts should be replaced "in short increments" with spending cuts and revenues like repealing oil and gas subsidies, which were discussed in earlier negotiations.

"There are many low-hanging pieces of fruit out there that Republicans have said they agreed on previously," Reid said. There's a lot of things we can do out there, and we're going to make an effort to make sure that there is ? sequestration is ? involves revenue."

Source: http://news.yahoo.com/gop-lawmakers-see-automatic-cuts-leverage-080336837--finance.html

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