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Democrats float plan to avoid automatic slash in spending

Democrats offer a plan to avert deep spending cuts due March 1, but Republicans aren't impressed.

February 14, 2013|By Lisa Mascaro, Washington Bureau
  • House Speaker John A. Boehner (R-Ohio) says across-the-board federal spending cuts are likely to kick in March 1 unless Democrats agree to serious long-term spending reductions.
House Speaker John A. Boehner (R-Ohio) says across-the-board federal… (Alex Wong, Getty Images )

WASHINGTON — Two weeks before deep budget cuts are due to slice across the federal government, Senate Democrats proposed an alternative Thursday that would swap some reductions for a tax on people who make more than $1 million a year.

The proposal has little chance of Republican support, even though neither party wants the automatic cuts. But Republicans are increasingly willing to stomach the reductions in defense and domestic spending rather than accept President Obama's call for a "balanced" approach that matches cuts with new revenue.

The Democratic alternative would replace half of the scheduled cuts with the so-called Buffett Rule, a requirement that those who have adjusted gross incomes above $1 million pay a minimum 30% tax rate.

The rule, a favorite of the president, is named for billionaire investor Warren Buffett, who has complained that tax loopholes and deductions allow him to pay a lower effective tax rate than his secretary.

"Now, Republicans in Congress face a simple choice," White House Press Secretary Jay Carney said in a statement. "Do they protect investments in education, healthcare and national defense, or do they continue to prioritize and protect tax loopholes that benefit the very few at the expense of middle- and working-class Americans?"

The White House and its Democratic allies in the Senate are returning to a strategy that has shown some success — portraying Republicans as protecting tax breaks for the wealthy at the expense of deep reductions in popular domestic programs.

Polls show that, although Americans agree with Republicans that deficits are worrisome and that spending should be reduced, enthusiasm wanes when the cuts slice into mainstay programs in transportation, education or other government services.

At the same time, majorities of Americans have shown a willingness to ask the wealthiest to pay more, as happened when Obama secured a tax increase on households earning more than $450,000 in the New Year's deal to avert the so-called fiscal cliff.

Republicans are gambling that by resisting the president's call for new taxes they will win the budget reductions that they were unable to achieve in the deal.

House Speaker John A. Boehner (R-Ohio) asserted that the cuts, called sequestration, will begin March 1 unless serious changes are made in federal spending to achieve the Republican goal of bringing the budget into balance within 10 years. Nonpartisan analysts, noting that would extract federal money from the still-struggling economy, say that could damage the recovery.

"The sequester will be in effect until there are cuts and reforms that put us on the path to balance the budget over the next 10 years," Boehner said Thursday.

The $120-billion proposal from Democrats would postpone the across-the-board cuts for 10 months to make time to craft a broader solution. The Democratic package includes $55 billion in new revenue, primarily from the tax on the wealthy, along with cuts to farm subsidies and a smaller hit to defense than the automatic cuts coming next month.

Democrats dropped a proposal to close tax breaks on oil companies after protests from four oil-state Democratic senators.

The across-the-board cuts would eliminate as many as 750,000 jobs and reduce the growth of the nation's gross domestic product, according to the nonpartisan Congressional Budget Office.

Boehner met privately Thursday with Senate Majority Leader Harry Reid (D-Nev.), but the speaker has resisted the closed-door negotiations that characterized past fiscal battles because they drew protests from lawmakers in his Republican majority.

Instead, Boehner has shifted the burden of devising legislation to replace sequestration onto the Senate, as he has struggled to rally support for proposals from his divided GOP majority in the House.

Senate Republicans plan to present their own alternative. Sen. Kelly Ayotte (R-N.H.) would replace the across-the-board cuts with a plan to reduce the federal workforce by hiring only one new employee for every three vacancies.

The Democratic and Republican alternatives probably will come to a vote when Congress returns from its weeklong Presidents Day recess.

Both parties' proposals are likely to fail, leaving Congress without a clear alternative days before the cuts begin.

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