Appalled by sequester cuts, House begins efforts to avoid them

On a party-line vote, the House passed a plan Thursday aimed at saving the Defense Department from the automatic cuts mandated by last year's debt-ceiling deal by instead making cuts to social services and President Obama's health-care law, as well as raising pension contributions from federal workers.

The legislation, which passed 218 to 199 with no Democratic votes, is an attempt to alter the sequester – the debt deal's across-the-board cuts to the Pentagon and to social services, which are set to take effect Jan. 2, 2013, because Congress failed to come up with an alternative. 

The measure is certain to die in the Democrat-held Senate, and it has its critics on both sides of the aisle in the House, too – though for vastly different reasons. 

To the left, it is an all-out assault on the poor and the elderly. “It asks for more of those who have less and less from those who have more,” said House minority whip Steny Hoyer (D) of Maryland on the House floor. 

Some Republicans, meanwhile, say the bill is merely election-year political cover. It allows House Republicans who voted for the debt-ceiling increase to say that they voted for a measure that would have offset that increase – while at the same time preserving precious Pentagon funding. 

“This is a smokescreen to protect people who voted to raise the debt ceiling,” said Rep. Jeff Landry (R) of Louisiana on Wednesday. “Listen, I like the cuts. Why couldn’t we have had those cuts last year?”

To supporters, however, the legislation stands as an opening bid from Republicans when sequester negotiations heat up in earnest after the November elections. Moreover, it highlights a key GOP talking point: While the Senate has gone nearly three years without proposing a budget, House Republicans have been unafraid to make tough fiscal decisions. 

"We believe the purpose of the sequester was to replace the fact that Congress isn't governing," House Budget Chairman Paul Ryan (R) of Wisconsin said as debate began on the bill Thursday. "Well, let's have Congress govern.”

The Ryan legislation handles the sequester by spreading out much of next year's budget hit over a decade. In all, the sequester would lop $900 billion from the federal budget during the next decade, starting with $109 billion next year. That $109 billion would come from $55 billion in cuts to Medicare ($12 billion) and non-defense discretionary spending ($43 billion) on one hand and $55 billion in Pentagon cuts on the other. 

Congressman Ryan's plan allows the $12 billion in Medicare cuts to continue and adds $18 billion in new spending cuts. It also lowers the overall budget by $19 billion. But that total is $60 billion short of the $109 billion called for by the sequester. Ryan's plan pays that balance over the next decade though a variety of spending reductions headlined by cuts to health care and the increased federal pension contributions.

To the House’s most conservative members, though, Ryan's decision not to enact all the sequester's discretionary cuts in 2013 is a fatal flaw. The sequester aimed to bring the federal discretionary budget down to $950 billion. Under the Ryan plan, the discretionary budget would be $1.027 billion.

“We can talk about all these cuts that are going to happen down the road, but I care about the current year, what we can control,” said Rep. Justin Amash (R) of Michigan, who voted against the measure, on Wednesday. “Discretionary spending is supposed to be at $950 billion – we are going to be way above that.”

Sixteen Republicans broke ranks to vote against the bill.

Democrats are furious about how the Ryan plan achieves its $18 billion in new cuts.

• Some $7.7 billion of that comes through cuts to nutrition and food programs, such as the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. That would lead to more than 2 million Americans being removed from the program.
• The legislation also eliminates the Social Services Block Grant, which gives money to states to support a wide variety of programs including Meals on Wheels.
• It also removes limits on how stringent states can be in determining eligibility for a children’s health insurance program, a change that could leave 300,000 children without health care by 2015.

In the longer term, the law targets both the president’s health-care reform law and the Wall Street reform bill. It drains a public and preventive health fund (savings: $11.9 billion over 10 years), curtails funding for the state health-insurance exchanges (savings: $13.5 billion), and banks on an estimated $66.5 billion in savings from medical-malpractice reform.

On Wall Street reform, the measure generates a controversial $20 billion in savings by eliminating fees assessed to financial institutions to help pay for regulators’ ability to wind down failing financial firms with more than $50 billion in assets. Democrats say the fees will head off even larger costs in the future. Republicans argue the existence of the fund perpetuates the phenomenon of “too big to fail” banks it claims to avoid.

House Democrats offered their own alternative legislation – a proposal that would have offset the sequester by eliminating subsidies to large oil firms and agricultural interests and instituted the “Buffett Rule,” instituting a minimum tax for millionaires, to offset the sequester. The proposal was defeated in the House Budget Committee on a party-line vote.

At least one House Republican worried that the GOP measure would help Democrats paint Republicans into a political corner. 

“I think we’re losing moral authority as Republicans if there’s something that’s not on the table,” said Rep. Raul Labrador (R) of Idaho at a press conference Wednesday. “If we keep just protecting defense contractors and the defense industry but saying … we have to reduce spending in all these other areas, we’re actually becoming the caricature that the Democrats are painting for us.”