With Debt Ceiling Pushed Out Of Sight, Sequestration Comes Back Into View

Lost in the new discussion of immigration is a key deadline created in the fiscal cliff resolution over New Year's — the March 1 start of automatic spending cuts originally created by the 2011 debt ceiling compromise.

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This week, the Senate is expected to delay a political fight over the debt limit, the kind of brawl that could hurt the slowing economy. But they're really just putting off one fight for another, a debate over whether to avert the upcoming sequester. That's the only in Washington term for across-the-board spending cuts set to hit March 1st. The cuts would be severe and have few supporters.

But as NPR congressional correspondent Tamara Keith reports, lawmakers still can't seem to find a way around them.

TAMARA KEITH, BYLINE: These across-the-board cuts are set to hit everything from defense to education. The only things largely unscathed are Medicare and Social Security. Furloughs are likely. Layoffs, too. And to many, the worst part is they'll be indiscriminate. No vital program spared, no low-priority spending, even wasteful spending, specifically targeted for cuts.

The Senate's number two Democrat, Dick Durbin of Illinois, says this was by design.

SENATOR DICK DURBIN: Some pretty harsh things will occur. These across-the-board cuts in agencies are mindless. It was supposed to be such an outrageous penalty, we'd never reach it. Looks like we're going to reach it.

KEITH: And he's not the only one saying these cuts are inevitable.

REPRESENTATIVE PAUL RYAN: I think the sequester is going to happen.

KEITH: This is Paul Ryan, the Republican chair of the House Budget Committee, speaking on NBC's "Meet The Press," over the weekend.

RYAN: Because the Democrats have opposed our efforts to replace those cuts with others and they've offered no alternatives.

KEITH: More precisely, Democrats haven't offered any alternatives the Republicans are willing to accept. The $1.2 trillion sequester was created as part of the agreement to raise the debt ceiling back in 2011. It split the cuts between defense and non-defense. House Republicans have passed two bills that would replace the sequester with different cuts, cuts Democrats like even less.

Democrats haven't passed any bills on the topic, but they argue it shouldn't be all cuts, that, for instance, tax loopholes should be eliminated, too. Again, Senator Durbin.

DURBIN: I think that if we are going to have any substitute for sequester, it's going to have to include revenue, so that may explain why Mr. Ryan and others are saying it's inevitable to go to sequester.

KEITH: So far, there hasn't been much compromise and while many members of Congress say these cuts are going to happen, a lot of them are worried about the consequences. Take South Carolina Republican Senator Lindsey Graham.

SENATOR LINDSEY GRAHAM: If you don't have a bipartisan solution, it will happen. And I don't know how to explain this to anybody back home.

KEITH: Graham is concerned about the defense cuts, which this year, would amount to a more than 7 percent hit on DOD.

GRAHAM: What kind of signal are we sending to devastate the military, according to Leon Panetta, shoot ourselves in the head from a national security point of view and nobody seems to be too energized about it. We're four weeks away.

KEITH: House Republicans, especially those affiliated with the Tea Party, believe the cuts of the sequester are necessary.

REPRESENTATIVE JOHN FLEMING: Now the problem is the cuts won't be where we want them to be, but they won't be where the Democrats want them, either.

KEITH: John Fleming is a Republican Congressman from Louisiana.

FLEMING: The sequester is law. Those cuts happen no matter what. We're willing to hang in there and insist that those cuts go into place, but we'd rather have them redistributed in a way that would be much more beneficial.

KEITH: So what are the consequences if this disagreement glides right past the March 1st deadline? Joel Prakkin, senior managing director of Macroeconomic Advisors, a forecasting firm, says if the cuts stayed in place through the year, it would reduce economic growth by seven-tenths of a percentage point.

JOEL PRAKKIN: It's not catastrophic, but it is a fiscal drag in an already weak economy and so it would concern me. It would be a downside risk to the economic outlook.

KEITH: He says the sequester is bad policy implemented in a bad way, and economist Diane Swonk at Mesirow Financial agrees.

DIANE SWONK: This economy is already dangerously close to a stall speed and certainly the sequester could definitely stall things out.

KEITH: Whether the economy stalls may just depend on whether Congress and the president can find some common ground in the next four weeks and beyond, and whether they can finally put an end to this long stalemate over the proper balance of revenues and spending cuts. Tamara Keith, NPR News, the Capitol.

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