Could Congress and the Obama administration be losing their nerve? After striking a deal this summer that would automatically trigger deep cuts in defense and domestic spending unless a new bipartisan “Super Committee” agrees to a plan for achieving major deficit reduction, some lawmakers and Pentagon officials already are talking about gutting the deal if it means additional deep cuts in the Pentagon budget.
If the Super Committee cannot agree to at least $1.2 trillion of additional deficit reduction before Thanksgiving (and let's not kid ourselves, the possibility of Congress cutting a deal is as likely as finding a truffle in Central Park), then the new budget law passed in August would automatically force those cuts, with half coming from defense and half from domestic programs other than Social Security, Medicaid, veterans benefits, military pay and other politically sensitive programs.
The joint House-Senate committee launched a month ago with high hopes for success. But after the debt ceiling debacle, few believe the deficit panel can reach a “grand bargain” because of intractable political differences between President Obama and Republican leaders. As a result, there is growing fear that the defense budget will be hit with an additional $600 billion of cuts in the coming decade on top of the already agreed to $400 billion.
Obama and Defense Secretary Leon Panetta have warned of a “hollow military” if the additional spending cuts are imposed, while House and Senate armed services committee members and other conservatives are threatening a revolt if the automatic across-the-board spending cuts in the defense budget are triggered.
Sen. Lindsey Graham, R-S.C., told the Fiscal Times Tuesday. “And I will do everything I can between now and then to replace the triggers.” Graham, a member of the Senate Armed Services Committee, said, “We should repeal the trigger” and replace it with a more sensible formula that would spread the savings evenly throughout the government, instead of front-loading them with defense cuts.
After the government came dangerously close to defaulting on its $14.3 trillion national debt, the House and Senate approved a budget agreement in early August to raise the debt ceiling and make a down payment on deficit reduction. While the first stage of the deal locked in nearly $1 trillion of deficit reduction, another $1.2 trillion to $1.5 trillion of deficit reduction was left to the special joint House-Senate committee appointed by Republican and Democratic leaders from both chambers.
It was the perfect maneuver to take some of the onus off of rank and file lawmakers for deep spending cuts that aren’t necessarily popular with many constituents, despite polls showing substantial support for controlling the long term deficit. The enforcement mechanism – called “sequestration” or automatic across the board spending cuts -- has been used off and on by Congress with mixed success going back to the Balanced Budget and Emergency Deficit Control Act of 1985, better known as "Gramm-Rudman-Hollings”.
Gramm-Rudman-Hollings imposed spending caps and automatic spending cuts or sequesters. A series of deficit targets were in place to balance the federal budget by 1991 but Gramm-Rudman did not take into account changes in the economy, and Congress ultimately chose to ignore the mandate.
The law’s failure gave rise to the National Performance Review (NPR) which was set up in 1993 by the Clinton Administration. The eight year initiative, headed by Vice President Al Gore, sought to cut the size of government and remove unneeded government regulations. The NPR had a goal of reducing the federal workforce by more than 250,000 positions, but the federal civilian workforce ended up decreasing by 300,000. It turned out these cuts were not equal across all of the federal agencies . Ironically, the cuts gave rise to a $320 billion “shadow government” populated by contract workers who in many cases operate independently of direct government supervision.
The study, “Making Smart Cuts,” found that across-the-board cuts tend to penalize the most efficient government agencies. Cuts over multiple years can end up weakening an agency’s ability to carry out functions and can result in more reliance on contractors, the report said. Some federal agencies already anticipating budget cuts have offered buyouts and early retirement to employees.
At President Obama’s request, the Pentagon is doing a comprehensive audit of its nearly $700 billion annual budget to look for new savings, and potentially cut anywhere from $430 billion to $460 billion over the next decade. The debt ceiling deal requires the Defense Department to cut its budget by $400 billion over the next decade. Panetta and his predecessor at defense, Robert Gates, have said that cutting more than that could produce disastrous consequences – destroying the finest military in the history of the world.
Kyl said he would quit the Super Committee if the group decided to cut more than the $400 billion. Other Republicans on the Super Committee say they want to see the Pentagon’s budget left alone and instead trim entitlement programs like Medicare and Medicaid, while Democrats insist on raising tax revenues on high-income individuals and corporations.
Sen. Jeff Sessions, R-Ala., the ranking member of the Senate Budget Committee, said that he would probably support an effort to kill the budget enforcement trigger if it meant sequestration of the defense budget. “I would reluctantly find myself probably with no choice but to look for some way to avoid this disproportionate reduction in spending,” he told the Fiscal Times.
House Armed Services Committee Chairman Buck P. McKeon, R-Calif., and other Republican and Democratic committee members are waging war on the budget trigger, declaring that it threatens national security. Senate members generally have been less vehement in their opposition than House members, but clearly many believe that if the defense spending cuts get out of hand, Congress could always repeal or tamp down the trigger mechanism in the next year or two – before the cuts actually take place.
Michelle Hirsch contributed to this report.