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Sequester flexibility might not make final debt, shutdown bill

Oct. 16, 2013 - 06:00AM   |  
By JOHN T. BENNETT   |   Comments
Sen. John McCain, R-Ariz., said he doubts that language giving the Pentagon the ability to decide what gets cut under sequestration would make it into legislation lifting the debt ceiling and reopening the government. (AFP/Getty Images)

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WASHINGTON — A plan favored by Democrats and Republicans to give the Pentagon and other department heads greater flexibility to choose what gets cut under sequestration appears in jeopardy.

Senate leaders and sources had indicated on Tuesday that they were inclined to include language in an emergency bill to temporarily raise the nation’s borrowing limit and reopen the government a provision granting Defense Department brass much-desired flexibility under sequestration.

Senate Majority Leader Harry Reid, D-Nev., even endorsed the idea around noon Tuesday on the chamber floor. Reid’s seeming endorsement came in the form of criticizing a now-dead House version of the emergency legislation that did not include flexibility language.

“The proposal they have sent gives the president of the United States, the chairman of the Chiefs of Staff, no flexibility whatsoever when [the next round of ] sequestration kicks in on [Jan.] 15,” Reid said.

“We are not asking to change those [spending cap] numbers. We agreed to those numbers. We voted to approve those numbers, but they won’t even allow flexibility to allow the Department of Defense to shift that money around,” Reid said. “I do not know how the defense of this country can go forward if they don’t have flexibility with losing $22 billion beginning January 15. They don’t even give authority for that.”

A senior Senate GOP source told Defense News on Sunday that Senate Minority Leader Mitch McConnell, R-Ky., also supported inserting sequester-flexibility language into the final debt-ceiling and government shutdown-ending bill.

Many pro-defense lawmakers in the Senate believe that if the military must live with another round of sequestration, Congress should give Pentagon brass and congressional appropriators the legal authority to determine what should get cut the deepest and what should be protected. That’s just what the proposed flexibility language would do.

Senior Senate Democratic and GOP sources were mum when asked Wednesday morning about the language, a sign it could be on the chopping block as Reid and McConnell finalize the emergency debt-ceiling and shutdown-ending legislation that the House may first vote on then send back to the Senate before Thursday’s Treasury Department-set default deadline.

Senate Armed Services Committee member Sen. John McCain, R-Ariz., told Defense News late Tuesday that he doubts the language will make it into the final version of the emergency legislation.

“I would be glad to have it in there,” he said. “But I don’t think enough Democrats will let that happen.”

That’s because Senate Democrats intend to use the weeks between the likely temporary resolution of the current debt-ceiling showdown and government shutdown lobbying to address sequestration in what they hope will be a bigger fiscal deal early next year.

The emergency fiscal deal would reopen the government until Jan. 15, while raising the debt ceiling until Feb. 15.

Senior Democrats want to use that window to negotiate with Republicans and the White House over other deficit-paring items that would replace or significantly lessen the 2014 round of defense and domestic sequestration cuts. For the Pentagon, that is slated to be around a $50 billion cut that would kick in on Jan. 15 unless Congress acts.

The No. 3 Senate Democrat, Chuck Schumer of New York, explains the Democratic leadership’s strategy this way: “Open up the government immediately for a period of time before the sequester hits and then have serious discussions where we might be able to undo the sequester.”

“I’m optimistic that could work,” Schumer said Sunday on CBS’ “Face the Nation” program.

Lawmakers and sources say Republicans have pushed back in closed-door negotiations, skeptical that Democratic leaders want to exceed spending caps put into place by the same law that created sequestration, the 2011 Budget Control Act.

What’s more, leadership might nix the language after hearing from Democrats and House hawks like House Armed Services Committee Chairman Buck McKeon, R-Calif., who are oddly aligned in opposing the language. Both camps believe including the language could make sequestration more palpable, killing efforts this winter to address it.

“The chairman’s goal is resolving sequestration,” McKeon’s spokesman, Claude Chafin, wrote in a Tuesday email. “He is concerned that contrary to a bipartisan desire to end the defense sequester, flexibility actually makes sequester a likely long-term proposition. He is opposed to any flexibility package at this time.”

All this comes as indications trickled in Wednesday that a path to temporarily end the shutdown and avoid a default — for a few months anyway — has been reached.

But if House Speaker John Boehner, R-Ohio, opts against, as reported, allowing the Senate plan to pass with mostly Democratic support, a debt default could spell doom for the defense industry.

“Treasury will have to figure out who gets paid and who doesn’t, because there won’t be enough money to cover all the government’s bills,” said the Lexington Institute’s Loren Thompson.

“According to the Bipartisan Policy Center, the biggest bills the government has to pay over the next four weeks — through Nov. 15 — are Medicare/Medicaid ($69 billion), Social Security ($49 billion), interest on the federal debt ($35 billion), defense vendor payments ($28 billion), and federal salaries & benefits ($24 billion),” Thompson wrote in a blog post. “That latter expense assumes the government shutdown has ended.

“These bills can be paid from current cash flow if the government stops funding everything else from food stamps to military pay to IRS tax refunds, but this is a political system, so once debt service is covered money will go to the claimants with the most electoral clout,” Thompson said. “That means Social Security, Medicare and military pay ($10 billion over the next month). But what about everybody else in line behind the old folks and warfighters?”

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