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Economic Armageddon? Republicans call sequester warnings hype

 

First there was the debt-ceiling crisis. Then the "fiscal cliff." Now it's the "sequester." 

While Congress averted the first two crises, it looks like lawmakers do not have a way out of the automatic spending cuts poised to hit Friday -- at least not yet. 

But are they really as bad as the Obama administration says? 

Republican lawmakers, while acknowledging the whole situation is far from ideal, have increasingly come to the conclusion that, no, they're not. 

"Most of the nation will wake up Friday morning and yawn," Rep. Tim Huelskamp, R-Kan., said. 

Democratic officials have started to concede that the layoffs and other major effects from the sequester will not be felt for another month or so. "Nice of them to tell us now," an aide to House Speaker John Boehner quipped, in response to the recent assessments. 

Further, it turns out the dollars-and-cents impact this year is not nearly what officials have been claiming. While officials typically say the cuts this year add up to $85 billion, the Congressional Budget Office estimates actual spending will only fall by $44 billion this year. 

The $85 billion figure refers to "budget authority" -- or what the government can allocate this year, but actually spend over several years. 

Sen. John Cornyn, R-Texas, said Wednesday that the president is using the issue "to scare people in order to grow the size of government." 

Even using the $85 billion figure, the cuts amount to just more than 2 percent of the total federal budget. Administration officials say, considering where the cuts will actually hit, non-defense budgets will face a 9 percent cut, while the Pentagon will face a 13 percent cut. 

That's significant, but Republicans say the administration has -- or should be granted by Congress -- the authority to spread the cuts around in a way that is less damaging. 

"It's absurd to think that the government cannot get by with a little more than a 2 percent reduction in spending when every working American had to figure out how to make do with 2 percent less in their paychecks just last month," Senate Republican Leader Mitch McConnell said Wednesday, referring to the recent expiration of a payroll tax cut for millions of Americans. 

In a glimmer of how officials might be considering less-damaging ways of cutting their budgets, Transportation Security Administration chief John Pistole testified at a House hearing Wednesday that his agency would look at implementing a hiring freeze and cutting back overtime before furloughing workers. 

The urgency, or lack thereof, can be underscored by the schedule of meetings. President Obama, returning from a trip to Virginia where he again pressured Republicans, has set up a meeting for Friday with the top four congressional leaders, in his first sitdown with Republicans this year. 

Considering the deadline is Thursday at midnight, one congressional Republican questioned why the president was waiting until the end of the week. 

"Either someone needs to buy the White House a calendar, or this is just a -- belated -- farce. They ought to at least pretend to try," the Republican told Fox News. 

Fresh polling suggests the country is not in a unified panic over the cuts. A survey by the Pew Research Center and USA Today showed only a quarter of people are closely following the issue, though most said the impact on the economy would be negative -- and most agreed that tax increases should be on the table as part of any compromise, which is what Obama has demanded. 

No matter how the cuts are implemented, the impact will be widespread. Roughly half will hit the Pentagon, which likely means furloughs for thousands of civilian workers and cutbacks elsewhere in the budget -- attracting the most attention has been a recent decision not to deploy an extra aircraft carrier to the Persian Gulf. 

Practically every federal department has warned about the impact to their budgets, and to the public. The Department of Homeland Security has warned border security could be affected, and Immigration and Customs Enforcement has already started releasing illegal immigrants from local jails in Arizona while planning to monitor them. 

The Transportation Department says FAA cutbacks will mean delays at the nation's biggest airports. The National Air Traffic Controllers Association warned Wednesday that runways could close, causing more delays, at those airports. 

Further, unemployment checks are expected to drop by roughly 11 percent around the end of March. 

Furloughs, though, are generally about a month away, because federal law requires the government to give advance notice. At that point, many federal workers will have to take a day off work per week without pay. 

On the Senate floor, Democratic Leader Harry Reid said "these cuts will not take place in the next few days." 

"But they're going to start real quickly," he said. "So, within a matter of weeks we're going to feel these cuts and feel them really, really painfully." 

Democrats, though, are taking a risk -- betting that the cuts will be so painful and devastating that voters will rally to their side and pressure Republicans to accept a blend of tax hikes and spending cuts to replace the whole package. 

Senior administration officials said as much Tuesday, predicting Republicans would cave on taxes, just as they did toward the end of the fiscal-crisis fight. 

But House Republican leadership aides said that strategy is "wrong." 

Unlike in the fiscal-crisis debate, they claimed the current law favors Republicans "because if nothing happens, spending cuts kick in." 

McConnell reiterated Wednesday that he's "ready to work" with Democrats to pass a different package of cuts, but his office continued to reject Obama's call for new tax revenue through closing loopholes.

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