This should be a week of hushed meetings and late-night negotiations, with all of Congress scrambling to find a solution to Washington’s latest budget crisis. On March 1, a set of automatic spending cuts forecast to wallop the economy will kick in. But on their first full day back from a leisurely recess, Congress was in no hurry to beat the looming sequestration deadline. There were dueling press conferences instead of bargaining sessions, and political theater trumped actual progress toward eluding a budget policy designed to be disastrous.
Republicans once deemed the sequester a deterrent. But as the deadline draws near, they have learned to love a policy they once claimed to loathe — or at least to appreciate its hard-won cuts to federal spending. And so on Tuesday, as Barack Obama visited Virginia to detail the dire consequences, Republicans waved off the warnings about the impact of a policy that will cut each affected nonmilitary program by about 5% and defense programs by 8%. The President, said Wyoming Republican John Barrasso, is “running around the country, crying wolf, saying that the sky is falling” in order to spook voters and ratchet up public pressure on Republicans to raise taxes. “We’re not buying it.”
As they shuffled through the Capitol’s gilded halls after feasting on catered lunches, senators acknowledged that with just two days until the sequester takes effect, there was no visible path to avoid the $85 billion in spending cuts that independent forecasters say will disrupt the essential functions of government, cost up to 700,000 jobs this year and shave economic growth by half.
Each Senate caucus will have the chance to bring a bill before Barack Obama is forced to initiate sequestration on Friday. Democrats plan to push a bill that would replace the sequester’s indiscriminate cuts with a combination of targeted funding reductions and tax increases on high earners. Republicans, meanwhile, are likely to propose a measure, backed by Senate minority leader Mitch McConnell, that would grant Obama greater leeway over how to implement the cuts in hopes that he would shoulder the public backlash as well. But Senators in both parties complain that such a proposal would relinquish Congress’s power of the purse — even if that power has been used, in this case, to write a bad law. “They call it flexibility, but it’s really an abdication,” says Democratic Senator Carl Levin of Michigan.
Neither Senate bill is likely to muster enough support to clear the 60-vote threshold. House Republicans, meanwhile, are waiting until “the Senate gets off their ass and begins to do something,” House Speaker John Boehner huffed Tuesday morning. Thus Capitol Hill is in a holding pattern. Both sides say they have the upper hand politically. Both insist the other’s policy demands are a nonstarter.
Where does this leave the U.S. economy? Unlike the debt-limit standoff, which could have immediately triggered a global economic crisis, the first days of sequestration will inflict relatively mild damage. While some impacts will be felt right away, the majority of the pain will be postponed until at least late March. Even if the sequester takes effect, its impact could be mitigated whenever Congress rewrites the law. One possibility is that it does so as part of a deal to avert a government shutdown by March 27, when federal funding is scheduled to run dry.
But even the looming threat of a government shutdown may not be enough to spur Congress. Over Democratic objections, House Republicans plan to introduce a bill, perhaps as soon as next week, that funds the government at the levels set under sequestration. “We certainly won’t accept spending levels above that,” says House Republican Mick Mulvaney of South Carolina.
Mulvaney says that at a January retreat at a posh resort in Williamsburg, Va., House Republicans came up with a new strategy to slash spending, the party’s lodestar ever since the Tea Party wave of 2010 returned the GOP to the majority in the lower chamber. No more one-on-one negotiations with Obama. Wait out the Senate rather than submit to tough votes on bills that couldn’t pass the upper chamber. “We came up with a plan. We’re working the plan,” Mulvaney says. “The first step was to pass No Budget, No Pay. The second step was to make sure the sequester goes in. Pass the CR at Budget Control Act levels. And then Paul [Ryan] passes his 10-year budget.”
“This is our attempt to move the debate onto ground that is more favorable to us,” Mulvaney adds. “I don’t think I’ve seen our conference as unified as we’ve been since Cut, Cap and Balance,” back in the summer of 2011.
Which is why these budget negotiations are shaping up as a long slog. For all the Republican rhetoric about reinventing the party, and shifting away from the succession of budget spats that consumed Congress and dragged down the GOP’s approval ratings, Capitol Hill on Tuesday seemed transported to a bygone Tea Party heyday, with both sides digging into their trenches and no legislative solution in sight. “Congress can replace these cuts anytime with just a little compromise,” Obama said Tuesday as he pressed lawmakers to replace the sequester during a visit to a shipbuilding company in Newport News. But compromise has been in short supply on Capitol Hill, and there’s no sign that one will emerge anytime soon.