Nine days from now, approximately 85 billion in federal spending cuts will go into effect unless Congress and President Barack Obama can agree on an alternative to the so-called “sequester.” After the jump I’ve posted details on how the spending cuts might affect Iowa, as well as recent comments and actions by some of the Iowans in Congress.
For those who don’t remember, the “sequester” was set in motion by the the Obama made in the summer of 2011 in order to get Congressional Republicans to raise the debt ceiling. The concept was that a bipartisan joint committee of House and Senate members would develop a plan to reduce the federal deficit. If that effort failed, across-the-board cuts in federal spending (including defense spending) would go into effect in January 2013.
As part of the deal to make most of the Bush tax cuts permanent, Congress voted at the beginning of January to postpone the sequester for two months. Scroll to the end of this post for more details on how the cuts might affect Iowans.
All five Iowans in the U.S. House and both of our state’s senators voted against the Budget Control Act for various reasons in August 2011. To my knowledge, Iowa is the only state where the entire Congressional delegation opposed that deal.
In recent weeks, Democrats and Republicans have been trying to blame the coming sequester on the other side. House Republicans refuse to consider any tax increases as part of a new deal to reduce the deficit. In addition,
House Republicans have made a concerted effort to remind voters that it was the Obama administration that originally suggested the idea of the sequester during negotiations over the debt ceiling. GOP leaders have repeatedly underscored that fact in press briefings, and conservative social media accounts refer to the looming cuts as the “Obamaquester.”
That narrative omits one simple fact: Obama wouldn’t have proposed any sequester if Republicans had agreed to pass a “clean” debt ceiling hike, as had been standard practice for decades. House Speaker John Boehner bragged about the Budget Control Act deal in the summer of 2011, claiming that the “Sequestration process is designed to guarantee that Congress acts on the Joint Committee’s legislation to cut spending.”
Congressional Democrats want some new revenues to be part of any new deal to replace the sequester. Among other things, they advocate a “Warren Buffett rule” that would impose at least a 30 percent federal income tax rate on millionaires.
Yesterday the president tried to increase the pressure on Republicans to compromise, saying at a press conference,
“If Congress allows this meat cleaver approach to take place, it will jeopardize our military readiness,” Obama said.
“Are you willing to see a bunch of first responders lose their jobs because you want to protect some special interest loophole?” Obama said from the White House, where he was surrounded by emergency personnel who could be furloughed or laid off if the cuts move forward.
“Are you willing to see teachers laid off or kids lose access to Head Start?” he said.
Senator Chuck Grassley provided a Republican perspective in this memo to the news media on February 19.
Senator Chuck Grassley commented on what the President said today about the automatic spending cuts scheduled to start on March 1.
“It’s discouraging to see the President complain about fiscal responsibility after the record of the last four years, including having done nothing to avert the approaching sequester which the White House proposed and worked to enact in August 2011. The House of Representatives passed alternatives twice last year while the White House and Senate leadership did nothing. Regular order has been almost totally lacking under Democratic leadership of the Senate, especially on budgetary issues. What’s more, the sequester pales in comparison to the fiscal impact that looms from spending commitments to entitlement programs, including the new entitlement program created by the President’s 2010 health care law. There has been no leadership from the White House and Senate majority to pursue structural reforms to those programs, either, despite the importance of saving Medicare and Medicaid for future generations. The sooner Washington takes action, the less dramatic the changes need to be. It’s up to the President and the Senate to join in this debate and the development of proposals.”
The House isn’t even in session this week, having voted to adjourn on February 15. Representative Dave Loebsack (D, IA-02) issued this press release:
Loebsack: Congress is Once Again Skipping Town at Expense of Iowans
House Republicans vote to go on nine day recess despite threat of sequester
Washington, D.C. – Congressman Dave Loebsack today expressed dismay that House leadership will allow Congress to go into recess for nine days with the threat of across the board, arbitrary cuts known as sequestration set to begin on March 1st. This recess leaves only four legislative days to try and find a way to stop these devastating cuts. Loebsack continues to express his opposition to letting the automatic, across the board spending cuts contained in sequestration take effect.
“It is unconscionable that Congress is taking an undeserved week-long recess when the deadline to avert sequestration is only 14 days away. I have called on Congressional leadership for months to get to work on finding a solution to stop these arbitrary, across the board cuts,” wrote Loebsack in a letter to Congressional leaders. “There is no reason for Congress to not remain in Washington and work toward a solution. Iowans expect Congress to work on their behalf, not skip town instead of making the tough decisions needed to avert the real life consequences sequestration will have on the economy, Iowans, and people across the country. I urge you to keep Congress in session and get to work.”
A copy of the full letter can be found here.
I haven’t seen any specific comments about the sequester lately from House Republicans Tom Latham (IA-03) or Steve King (IA-04), but King sent out this press release on February 6 blasting the president for not laying out any path to a balanced budget.
Washington, DC- Congressman Steve King released the following statement after voting for the “Require a PLAN Act” (H.R. 444) today. The bill would require President Obama to either submit a budget that balances within 10 years or offer a supplemental budget plan by April 1, 2013, that demonstrates when it would achieve balance. So far, President Obama has submitted four budgets to Congress. None of them have ever reached balance, or shown a path towards future balance. King is a co-sponsor of the legislation.
“In the last two years, House Republicans have passed serious, responsible budgets. To contrast, the Senate has not passed a budget in nearly four years, and the President’s budgets are not serious, since they never even attempt to achieve balance or stabilize our debt – much less pay it down. Just yesterday the non-partisan Congressional Budget Office issued its annual budget and economic forecast, and its predictions are dire. The CBO says this debt will have ‘serious negative consequences,’ including lower wages for Americans, an increased risk for a financial crisis, and a huge increase in debt payments. According to the CBO, by 2020, we will be spending more on interest on our debt than we will be on national defense. By 2023, entitlement spending and interest on the debt will consume more than 90% of federal revenue.
The bill I voted for today will simply force the President to say when his budget will balance, or publically admit what we all know: that it never will. House Republicans cannot continue to negotiate with ourselves. It’s time we had someone negotiating in good faith at the other end of the table. Today’s bill is one just more small step towards that end.”
For the record, Loebsack and Bruce Braley (IA-01) were both among the 26 House Democrats who voted with Republicans for the “Require a PLAN” Act, which passed by 253 votes to 167. Most of the Democratic caucus opposed that bill.
During the summer of 2011 and again in late 2012, President Obama made clear that he would like to strike a “grand bargain” involving tax reform, spending cuts, and cuts to entitlement programs. Some Democrats have become nervous again lately that the president will repeat those offers. On February 15, a majority of the House Democratic caucus urged the president not to make any such deal.
WASHINGTON-107 House Democrats, a majority of Democrats in the House of Representatives, wrote President Obama today, urging him to reject any proposals to cut benefits millions of American families depend upon through Medicare, Medicaid and Social Security. The letter was led by Rep. Jan Schakowsky (D-IL),Congressional Progressive Caucus Co-Chairs Reps. Keith Ellison (D-MN) and Raúl M. Grijalva (D-AZ), Rep. John Conyers (D-MI), and Rep Donna Edwards (D-MD).
The Members specifically singled out “Chained CPI”-a proposal to reduce Social Security benefits by changing the way inflation is calculated-and raising the Medicare retirement age as policies they oppose.
“A commitment to keeping the middle-class strong and reducing poverty requires a commitment to keeping Social Security, Medicare and Medicaid strong,” the Members said in the letter. “We urge you to reject any proposals to cut benefits, and we look forward to working with you to enact approaches that instead rely on economic growth and more fair revenue-raising policies to solve our fiscal problems.”
You can read the full text of the letter below.
February X, 2013
Dear President Obama:
We want to thank you for standing strong in the American Taxpayer Relief Act to protect Social Security, Medicare, and Medicaid from benefit cuts that would jeopardize the well-being of millions of Americans.
We write to affirm our vigorous opposition to cutting Social Security, Medicare, or Medicaid benefits in any final bill to replace sequestration. Earned Social Security and Medicare benefits provide the financial and health protections necessary to keep individuals and families out of poverty. Medicaid is not only a lifeline for low-income children, pregnant women, people with disabilities and families, it is the primary source of long-term care services and supports for 3.6 million individuals. We cannot overstate their importance for our constituents and our country.
That is why we remain deeply opposed to proposals to reduce Social Security benefits through use of the chained CPI to calculate cost-of-living adjustments. We remain committed to making the changes that will extend solvency for 75 years, but Social Security has not contributed to our current fiscal problems and it should not be on the bargaining table.
Similarly, we oppose proposals to increase Medicare cost-sharing requirements or to raise the age of eligibility. Half of all Medicare recipients live on less than $22,000 a year – yet they spend, on average, three times as much of those limited incomes on health care as other Americans. Raising their already heavy cost-sharing burden or increasing the age of eligibility doesn’t lower health care costs, it just shifts them to those who can least afford more financial burdens – seniors, people with disabilities and their families.
A commitment to keeping the middle-class strong and reducing poverty requires a commitment to keeping Social Security, Medicare and Medicaid strong. We urge you to reject any proposals to cut benefits, and we look forward to working with you to enact approaches that instead rely on economic growth and more fair revenue-raising policies to solve our fiscal problems.
You can view all the names of those who signed here. I was pleasantly surprised to see both Braley and Loebsack on the list. They haven’t been eager to align themselves with House progressives lately (although Loebsack has technically been a member of the House Progressive Caucus for most of the time he’s been in Congress).
Neither Braley nor Loebsack sent out any press release mentioning this open letter, so I wouldn’t call them “loud and proud” against cuts to Medicaid, Medicare, and Social Security. Still, it’s nice to see them on the record opposing the “chained CPI” for Social Security benefits. Bleeding Heartland discussed here why that proposal is such a terrible idea.
The Democratic Congressional Campaign Committee sent out press releases yesterday highlighting the estimated impact of the sequester.
SEQUESTER FACTS: House Republicans’ Sequester Will Eliminate Millions of Jobs, Including More than 11,000 Jobs in Iowa
Tea Party House Republicans left the capital last week without any attempt to negotiate a deal on the sequester – a series of deep and indiscriminate cuts that experts estimate will eliminate millions of jobs and could throw the economy back into a recession. Rather than put a stop to the sequester by closing tax breaks for millionaires and corporate special interests, House Republicans are allowing it to take place.
The cuts will affect areas across the government from defense to domestic spending, including medical research, Army Corps of Engineers projects, federal law enforcement officers, Head Start and services to pregnant women. Republicans have refused to bring up a compromise plan that achieves the deficit reduction by ending special tax breaks for millionaires and corporations.
In Iowa, Sequester Will Eliminate More than 11,000 Jobs
The Plan that House Republicans Are Green Lighting
Study: Sequester Would Cut 11,116 Jobs in Iowa. According to a 2012 study by George Mason Professor Stephen Fuller, the automatic spending cuts affecting Department of Defense and non-Department of Defense discretionary spending would lead to significant job losses in every state.
· Sequester Would Cost Iowans $569 Million in Total Lost Income.
[The Economic Impact of the Budget Control Act of 2011 on DOD & non-DOD Agencies, Professor Stephen Fuller, 7/17/12]
Study: Sequester Would Slash Critical Maternal and Child Health Services. The American Academy of Pediatrics studied the impacts that sequestration will have on Iowa and projected that:
· 5,800 mothers and young children would lose access to food assistance and critical health care.
· 2,100 fewer children would receive vaccinations.
· 25,700 fewer women, children and families would receive critical preventive health care.
· $22 million would be cut from the NIH’s research projects based in Iowa.
[American Academy of Pediatrics, 10/1/12]
Study: Sequester Eliminates $20.5 Million in Education Funding, Affecting Thousands of Iowa Students. The Center on Budget and Policy Priorities analyzed how sequestration would impact education in Iowa and concluded that the state would lose $20,583,000 in federal funding for critical education programs. These cuts include:
· $6.2 million would be cut from special education funding, affecting 3,100 students.
· $668,000 would be cut from grants for career and technical education, affecting 7,460 students.
· $695,000 would be cut from need-based grants that would help 32,360 low-income Iowans pay for college.
· $3 million would be cut from Head Start.
[NEA, February 2013]
Nationally, Sequester Will Be Devastating
CBO: Sequester Expected to Eliminate 1.4 Million Jobs Nationally. The non-partisan Congressional Budget Office concluded that 1.4 million jobs are at stake if sequestration were to go into effect. “According to CBO’s projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013 (as measured by the change from the fourth quarter of 2012 to the fourth quarter of 2013)-reflecting a decline in the first half of the year and renewed growth at a modest pace later in the year. That contraction of the economy will cause employment to decline and the unemployment rate to rise to 9.1 percent in the fourth quarter of 2013.” [Congressional Budget Office, 11/8/12]
CBO: Sequester Expected to Cut Economic Growth in Half. The sequester is also expected to lead to a recession in 2013 by slashing economic growth in half.
According to the Wall Street Journal’s MarketWatch, “Fiscal tightening including the automatic budget cuts known as the sequester would cut U.S. growth in half in 2013 if allowed to go into effect, the Congressional Budget Office said Tuesday in a new budget and economic outlook. … CBO said Tuesday that growth would be about 1.5 percentage points faster in 2013 if not for fiscal tightening including the sequester.” [MarketWatch, 2/5/13]
By The Numbers: Sequestration Will Target Women, Child, Veterans, and the Most Vulnerable
According to an analysis by U.S. Senate’s Appropriations Committee on the impacts of sequestration, as reported by the New York Times:
· 4,000 workers would be furloughed every day at the F.A.A., causing flight backups.
· 70,000 children would lose Head Start.
· 14,000 teachers and other school employees could lose their jobs.
· 125,000 families would be put at sudden risk of homelessness because their rental assistance would end.
· 373,000 seriously mentally ill adults and severely emotionally disturbed children would most likely lose their treatments.
· 600,000 women and children would lose nutrition aid from the Women, Infants and Children program.
· 251,000 civilians employed by the Army could be furloughed for up to 22 days.
· $3 billion would be the potential shortfall in the military’s health insurance program; some services could be denied for retirees and dependents of active-duty personnel.
· 7,750 Customs and Border Protections agents could be laid off.
[New York Times, 2/16/13; House Appropriations Committee, 2/13/13]
The University of Iowa could lose tens of millions of dollars:
Research funding at the University of Iowa could take a $20 million to $30 million hit if lawmakers cannot reach agreement on a deficit-reduction package by March 1 and spending on many federal programs is reduced across the board.
UI researchers and professors on Monday told Rep. Dave Loebsack, D-Iowa City, that the looming federal sequestration would have short-term financial impacts but also do long-term damage to federally-funded research programs.
Research funding can’t be turned up and down like volume control with the expectation that work can pick up where it was left off, said Ed Stone, a professor of ophthalmology & visual sciences who is director of the UI Institute for Vision Research. Doing that takes some of the most innovative and cutting-edge research programs and kills them, he said.
“What took two months to destroy might take two or three or five to build back” or it may never be restored again, he said.
I predict that Congress will manage to restore all the military spending affected by the sequester. Only the non-defense domestic spending cuts will be implemented.
All of the above could have been avoided if Congress had simply raised the debt ceiling in the summer of 2011.
Any relevant thoughts are welcome in this thread.