Back To The Debt Debacle: A Look At What's Changed

It was just a year ago that the House rejected a deal with President Obama and threatened to allow the U.S. to default on debt obligations coming due. The Tea Party refusal to raise the debt ceiling led to a downgrade in U.S. credit and a selloff in the markets. NPR's David Welna reports on what's changed since then and what hasn't.

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It was a year ago today that Congress defused a standoff that rattled world financial markets. The Republican-controlled House had rejected a budget deal with President Obama, and was threatening to allow the U.S. to default on its debt obligations. The refusal to raise the debt ceiling led to a downgrade in U.S. credit and a sell off in the markets. Congress hastily enacted what it called the Budget Control Act. That bill instructed a Super Committee to come up with more than a trillion dollars in deficit reduction. Any failure to do so would trigger automatic spending cuts, known as sequestration. That's exactly where things are now headed.

As NPR's David Welna reports, Congress is suffering a bad case of buyer's remorse.

DAVID WELNA, BYLINE: When Assistant Senate Majority Leader Dick Durbin announced the vote tally a year ago today on the Budget Control Act, it was clear the measure had broad bipartisan support.

SENATOR DICK DURBIN: Any Senators which to change their vote? If not, on that question, the ayes are 74 and the nays are 26.

WELNA: One year later, some Senators who voted for the Budget Control Act are having regrets.

SENATOR JOHN MCCAIN: I've openly said that was a mistake.

WELNA: John McCain is the top Republican on the Senate Arms Services Committee.

MCCAIN: Most of my colleagues that voted for it probably feel the same way, given the situation we're facing.

WELNA: And this is the situation. The Super Committee failed to agree on a deficit reduction plan. So unless Congress finds such savings in the next five months, sequestration will automatically kick in. $55 billion would be cut from defense spending next year, and the same amount would come from budgets for education, child nutrition, food safety, health research and many other non-defense programs. Acting Office of Management and Budget Director, Jeffrey Zients told the House Arms Services Committee yesterday that the Obama administration is girding for all of that to happen.

JEFFREY ZIENTS: In the very unfortunate event that Congress fails to pass a balanced deficit reduction package and avoid sequestration, the administration will indeed be prepared to issue the sequestration order on January 2nd.

WELNA: Deputy Defense Secretary Ashton Carter warned the same panel that sequestration would have what he called a devastating effect on defense.

ASHTON CARTER: Nobody wants it to happen, and we don't want to begin taking actions now to tear ourselves to pieces in the expectation of something that's really stupid if it happens five months from now.

REPRESENTATIVE CHRIS VAN HOLLEN: The keys to this lock are totally in Republican hands.

WELNA: That's Democratic Congressman Chris Van Hollen of Maryland. He says the Super Committee he sat on failed to reach agreement on deficit reduction because Republicans on the panel refused to consider any tax increases to lessen the need for spending cuts.

HOLLEN: When they had to choose between protecting special interest tax breaks, or protecting defense spending, they chose to protect the special interest tax breaks. That was their priority, and they're now talking a big game on defense. They just don't want to pay for it.

WELNA: A year ago, House Speaker John Boehner, like the rest of the Republican leadership voted to allow the sequester. Now Boehner blames President Obama.

REPRESENTATIVE JOHN BOEHNER: It was the president who came up with the sequester because he didn't want the debt limit to get in the way of his campaign.

WELNA: Last week, Mr. Obama rejected such charges while speaking to a VFW convention in Reno.

PRESIDENT BARACK OBAMA: There are a number of Republicans in Congress who don't want you to know that most of them voted for these cuts. Now they're trying to wriggle out of what they agreed to do.

WELNA: For South Carolina Republican Senator Lindsey Graham, the solution to this impasse is simple.

SENATOR LINDSEY GRAHAM: Barack Obama needs to pick up the phone and call John McCain and say, we've had our differences, let's solve this problem. I am convinced if a group of us went to the White House with some presidential leadership, we would knock this out in a day or two.

WELNA: Democrats say the solution is still a balance of spending cuts and revenue increases. Here's Senate Majority Leader Harry Reid.

SENATOR HARRY REID: We could avoid these defense cuts tomorrow if Republicans would simply agree to ask millionaires to pay their fair share.

WELNA: The Senate did agree last week to let tax cuts on income above a quarter million dollars expire at the end of the year, but the Republican-led House voted last night not to let any tax breaks lapse. David Welna, NPR News, the Capitol.

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