D.C.’s brinkmanship hamstrings economy
By PHILIP ELLIOTT
WASHINGTON — The spending cuts are here to stay if you believe the public posturing Sunday.
The Senate’s Republican leader Mitch McConnell called them modest. House Speaker John Boehner isn’t sure the cuts will hurt the economy. The White House’s top economic adviser, Gene Sperling, said the pain isn’t that bad right now.
So after months of dire warnings, Washington didn’t implode, government didn’t shut down and the $85 billion budget trigger didn’t spell doom. And no one has yet crafted a politically viable way to roll back those cuts.
“This modest reduction of 2.4 percent in spending over the next six months is a little more than the average American experienced just two months ago, when their own pay went down when the payroll tax holiday expired,” McConnell said.
“I don’t know whether it’s going to hurt the economy or not,” Boehner said. “I don’t think anyone quite understands how the sequester is really going to work.”
And Sperling, making the rounds on the Sunday news shows, added: “On Day One, it will not be as harmful as it will be over time.”
Both parties cast blame on the other for the automatic, across-the-board spending cuts but gave little guidance on what to expect in the coming weeks. Republicans and Democrats pledged to retroactively undo the cuts but signaled no hints as to how that process would start to take shape. Republicans insisted there would be no new taxes and Democrats refused to talk about any bargain without them.
“That’s not going to work,” said Sen. Kelly Ayotte, R-N.H. “If we’re going to increase revenue again, it’s got to go to the debt with real entitlement reform and real tax reform when you actually lower rates. … I’m not going to agree to any more tax increases that are going to go to increase more government.”
Sen. Lindsey Graham, R-S.C., said any tax increases were unacceptable.
“I’m not going to do any more small deals. I’m not going to raise taxes to fix sequestration. We don’t need to raise taxes to fund the government,” Graham said.
All of this comes ahead of a new, March 27 deadline that could spell a government shutdown and a debt-ceiling clash coming in May.
Boehner said his chamber would move this week to pass a measure to keep government open through Sept. 30. McConnell said a government shutdown was unlikely to come from his side of Capitol Hill. The White House said it would dodge the shutdown and roll back the cuts, which hit domestic and defense spending in equal share.
“We will still be committed to trying to find Republicans and Democrats that will work on a bipartisan compromise to get rid of the sequester,” Sperling said.
Senate Democrats and Senate Republicans last week put forward alternatives that would have avoided the cuts, but each side voted down the others’ proposals. The House Democrats proposed an alternative but the House Republicans did not let them vote on it.
House Republicans twice passed alternatives last year.
Obama has phoned lawmakers but it isn’t clear to what end; the White House refused Sunday to release the names of lawmakers Obama phoned. Boehner and McConnell said they had a productive meeting with Obama on Friday, but it didn’t yield a deal.
“Well, no one can think that that’s been a success for the president,” said Mitt Romney, Obama’s unsuccessful rival in November’s election. “He didn’t think the sequester would happen. It is happening.”
Obama and the Republicans have been fighting over federal spending since the opposition party regained control of the House of Representatives in the 2010 midterm elections. The budget cuts were designed in 2011 to be so ruthless that both sides would be forced to find a better deal, but they haven’t despite two years to find a compromise.
The $85 billion in cuts apply to the remainder of the 2013 fiscal year, which ends Sept. 30. But without a deal they will continue slashing government spending by about $1 trillion more over a 10-year period.
McConnell spoke to CNN’s “State of the Union.” Boehner was interviewed on NBC’s “Meet the Press.” Sperling appeared on ABC’s “This Week,” NBC and CNN. Ayotte appeared on ABC. Graham spoke with CBS’ “Face the Nation.” Romney was a guest on “Fox News Sunday.”
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