Lawmakers for both major political parties will huddle separately behind closed doors starting Tuesday, plotting strategy for the coming fight over how to prevent deep, across-the-board automatic federal spending cuts scheduled to begin on March 1.
That the parties are meeting separately and sometimes far from Washington says much about the current mood. Unless an alternative is adopted, some $85 billion in automatic spending cuts take effect in 24 days because of what’s known as the budget sequester.
As members of Congress head for the congressional retreats, which traditionally are intense, private sessions that aim not only to set the agenda for the coming year but to promote party unity, they also appear headed on a path for familiar, intractable battles later this month.
The automatic cuts are part of the 2011 debt ceiling deal, which mandates the spending reductions unless lawmakers agree otherwise. The thinking had been to join the parties at the hip, and that they’d reach some sort of compromise because the cuts would be so politically unpalatable.
Instead, as $109 billion in automatic cuts were due to take effect on Jan. 2, Congress passed a compromise postponing the cuts until March 1 as part of a deal that raised taxes on the richest 1 percent of Americans. The deal lowered the sequester figure to $85 billion, still a number that, if cut out of federal spending this year, would drag against an already anemic economic recovery.
But with the sequester deadline looming, it’s still Groundhog Day for rhetoric. Each side appears stuck in the same themes of the November elections and the New Year’s deal that avoided steeper tax hikes on 99 percent of Americans.
Democrats again are calling for higher taxes on big corporations and the wealthy to raise revenue and avoid deep spending cuts that would slow the economy. Republicans insist that the nation faces a spending problem.
“There are a lot of things we can do out there, and we’re going to make an effort to make sure that . . . sequestration involves revenue,” said Senate Majority Leader Harry Reid, D-Nev. “Part of it, the American people agree, should be the wealthiest people in America paying a little bit more, and there should be a balance of spending cuts and revenue.”
On the Senate floor Monday, Republican leader Mitch McConnell of Kentucky criticized the Democrats’ approach.
“If you were to listen to the Democrats, you’d think all of our ills could be solved by raising taxes on private jets or energy companies,” he said. These aren’t real solutions. . . . They’re poll-tested gimmicks.”
The sequester has potential to have more immediate impact on constituents. The cuts would affect a wide range of popular policies involving education, the arts, transportation, housing and other domestic programs. And the Pentagon is warning that the effects could be felt immediately.
Senate Democrats plan to meet Tuesday and Wednesday in Annapolis, Md., and House Democrats will meet for three days, beginning Wednesday, at a Virginia resort. President Barack Obama is expected to address both gatherings, and Democrats are expected to discuss raising revenue through loophole closing, as well as possibly capping income tax deductions.
Senate Armed Services Committee Chairman Carl Levin, D-Mich., is circulating a memo among colleagues that would seek to raise new revenues by closing some tax loopholes for energy companies, going after multinational corporations that shield their foreign earnings, and doing away with a tax break that allows hedge fund owners to skirt paying ordinary income taxes on their income; it permits them to pay the lower rate at which capital gains are taxed. Democrats are likely to discuss the Levin memo at their meetings this week.
Business groups don’t like being targeted under the Levin plan.
“Discriminatory tax increases, that certainly is not way to solve the problem, and we are very opposed to using tax increases to address this,” said Dorothy Coleman, vice president of tax policy for the influential National Association of Manufacturers.
She said that raising taxes on business was “absolutely the wrong direction.”
Senate Republicans will meet Tuesday at the Library of Congress. House Republicans met last month in Williamsburg, Va.
Republicans have been adamant that revenue should not be part of the mix. They support spending cuts and want to look beyond the immediate problem to find a long-range solution.
In the House of Representatives, Speaker John Boehner, R-Ohio, reiterated his view that the lack of spending cuts would hurt the economy.
“The sooner we solve our spending problem, the sooner we solve our jobs problem,” he said.
The House has passed legislation to delay the sequester with offsetting spending cuts instead of indiscriminate cuts, but the Senate has balked.
The biggest question to be resolved at the retreats involves the politics of dealing with sequestration. Washington endured an ugly fight to avoid the fiscal cliff in January, and then smoothly worked a deal to increase the nation’s debt limit.
“The biggest concern I have, frankly, right now, is the uncertainty, the budget uncertainty on Capitol Hill,” Defense Secretary Leon Panetta told CNN on Sunday, “because if the sequester is allowed to go into effect, I think it could seriously impact on the readiness in the United States, and that’s a serious issue.”