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Congress May Try Blocking Cuts if Debt Panel Fails

 

Congress is facing automatic cuts of $1.2 trillion over 10 years if a 12-member Super Committee can't agree to a package of expanded tax revenues and spending cuts, but lawmakers are looking for a way around the "sequestration" and avoid any painful reductions to their favored programs.

Sens. John McCain, R-Ariz., and Lindsey Graham, R-S.C., say they are writing legislation to prevent what they say would be devastating cuts to the military. Democrats maintain they won't let domestic programs be the sole source of savings.

Lawmakers have until the end of the day to get a plan out to the Congressional Budget Office to evaluate the numbers and still give two days for it to be presented by the Nov. 23 deadline. According to the plan, if a deal isn't reached, the savings will be found by chopping half from the defense budget and half from entitlement and domestic spending programs.

With that in mind, lawmakers are looking for an end run to their own law since cuts won't hit until 2013.

"I am committed to insuring that the American people get that deficit reduction that they were promised," committee co-chairman Rep. Jeb Hensarling, R-Texas, said on "Fox News Sunday." "But under the law, Congress will have 13 months to do that in a smarter, more prudent fashion."

"We do have the opportunity, even if the committee fails, to work around the sequester so that we still have $1.2 trillion in savings over 10 years, but it's not done in the very Draconian way that Defense Secretary (Leon) Panetta is referring to," said Sen. Jon Kyl, R-Ariz., on NBC's "Meet the Press."

President Obama has already threatened to veto "any measure that attempts to turn off the automatic cut trigger," according to spokesman Jay Carney, and Republican House Speaker John Boehner has said he would vote against efforts to change the provisions of the deal.

Mind-boggling to many is the fact that the $1.2 trillion in cuts over 10 years is a fraction being applied against a budget that calls for $44 trillion in spending over the same time period. 

"I have no doubt that there will be efforts to turn it off," said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. "Never underestimate the willingness of politicians to try to avoid making some of the hard choices."

Sen. Jeff Sessions, R-Ala., ranking member on the Senate Budget Committee, faulted President Obama for not getting involved.

"The Republican House laid out a good plan. The president, except for his irresponsible budget and the Republican Senate, has done nothing to lay out a plan that can be analyzed by the American people," he said. 

"The commander-in-chief is absent from battle," he told Fox News.

When the debt committee was first organized over the summer, the White House was left out of the negotiation in order to reduce any feared injection of politics, and let the lawmakers communicate among themselves.

That failed, however, in part, says Sen. John Kerry, D-Mass., a member of the debt panel, because Republicans refuse to allow tax increases on the highest earning Americans. 

Revenues are at a 60-year low. They're at 14 or 15 percent of all of our GDP. Traditionally they're at 18 percent, 19," Kerry said. "Fair and balanced is not giving the wealthiest people in America tax cuts while you ask people on Medicare and Medicaid to pony up more. ... The only thing blocking us is the insistence on the Bush tax cuts for the wealthy."

But Kyl told Fox News on Monday that Democrats only want to raise taxes, even if it's not necessary. 

"The committee was charged with finding another $1.2 or $1.5 trillion, and that they're not willing to do unless Republicans are willing to raise taxes," he said.

Committee co-chair Sen. Patty Murray was headed to the White House on Monday to attend a bill signing for a tax incentives package aimed at getting employers to hire veterans. The White House confirmed Murray will be there for the bill-signing only.

The committee could do its work in halves. For instance, if the panel produces less than $1.2 trillion in savings, automatic cuts are activated to make up the difference. So $800 billion in savings from the Super Committee would trigger $400 billion in automatic cuts.

By law, 18 percent of the automatic savings are assumed to come from interest costs the government would save from reducing the debt. If the Super Committee fails completely, out of the $1.2 trillion in automatic savings, $216 billion would be assumed interest savings.

That would leave $984 billion in automatic spending cuts over 10 years. That works out to around $55 billion annually each from defense and domestic programs though a CBO analysis shows that comes out to 10 percent of the Pentagon budget in 2013 alone, a huge hit.

"Unless we act today, the dismantling of the greatest armed forces in history could begin tomorrow," Rep. Howard P. McKeon, R-Calif., chairman of the House Armed Services Committee, wrote Super Committee leaders on Friday in a letter warning them of the consequences of the automatic defense reductions.

On the domestic side, the law exempts Social Security, Medicaid and many veterans' benefits and low-income programs. It also limits Medicare to a 2 percent reduction. That leaves education, agriculture and the environment programs exposed to cuts of around 8 percent in 2013, according to the CBO. For many Democrats, those are cuts worth fighting against, especially if Republicans try protecting defense programs.

"If they're going to try to protect defense, there'll be pushback," said Rep. Jim McGovern, D-Mass.

The Associated Press contributed to this report.