President Obama and Congressional Leaders Fail to Avert Sequestration

File Type: Article
Release Date: March 2013

On Friday, March 1, President Obama met with congressional leaders in an effort to prevent the $85 billion in across-the-board sequestration budget cuts scheduled to begin on that day. As expected, the meeting did not result in an agreement to delay the sequester, which was mandated by the Budget Control Act of 2011 arising from the debt-ceiling debate. While both Republicans and Democrats publicly stated that they disagree with the way the budget cuts will be implemented under the existing sequester, neither party was willing to give up on their positions on key issues of revenue.

The White House continues to demand additional tax increases as part of moving forward on budget discussions. Republicans are maintaining their position that they already agreed to tax increases as part of the legislation signed on January 2 that avoided the so-called “fiscal cliff,” and that the discussion on sequestration should be about reductions in spending.

Both sides had dramatized the immediate impact of the sequester cuts in order to gain negotiating leverage. The White House, for example, provided sequester information fact sheets detailing the level of funding cuts affecting the individual states for this year, including information on such items as how many Department of Defense employees would be furloughed. However, as the likelihood of sequestration increased, both sides reduced the rhetoric, and are now focusing on how to reduce or manage the sequestration cuts over the next few months. Because the impact of sequestration is not immediate, but will take time to filter through the various government programs affected,  the number of jobs lost  and amount of economic decline will depend on how long the sequester lasts.

The next opportunity to address the sequestration cuts will come in connection with a vote on continued funding for government expenditures for the remainder of this fiscal year. Funding for government programs expires on March 27, and a government shutdown will occur unless the Administration and Congress agree on continued funding levels. Both President Obama and congressional Republicans have stated they do not want to see a government shutdown, and Republicans are expected to pass funding bills this week incorporating the sequestration cuts.  The White House, Senate, and House will then have to come to agreement on a continuing funding resolution by that time.