White House Report Details Automatic Budget Cuts
Damian Paletta, Wall Street Journal, September 14th, 2012
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Automatic spending reductions set to begin in January would cut $109 billion from the federal budget through Sept. 30, 2013, including broad cuts to the military, food safety and U.S. embassy security, a new report from the White House said Friday.

The White House and members of Congress say they want to avoid the cuts, but so far they have made little progress toward an agreement on how to replace them with other deficit-reduction measures. Read the report

The spending cuts are required as part of the agreement between the White House and Congress last year that was tied to the increase in the federal debt ceiling. They agreed that $1.2 trillion in deficit-reduction measures over nine years would begin in January 2013 unless Congress came up with an alternative plan. The cuts were designed to be so deep they would propel lawmakers to replace them with a less onerous deficit-lowering package.

The White House initially resisted writing the report, worrying it could serve as a distraction from efforts the administration believed should be under way to avoid the cuts. But a number of lawmakers pushed for the report, saying that it would focus Congress on the extent of the possible spending reductions and prompt them to act.

The cuts to spending programs would total $984 billion over nine years, and the government would spend $216 billion less in interest payments on the federal debt, the report said.

The White House ticked through the federal budget line by line in the report, showing how a roughly 9% reduction in spending on military and other programs would affect government operations. There would also be a 2% cut in payments to Medicare providers, equal to $11 billion a year, the report says.

Under the law requiring the cuts, the White House has little discretion about where they would fall. Many could turn into political flashpoints. For example, they would include a reduction of $129 million a year in spending on the security, construction and maintenance of U.S. embassies around the world.There were bipartisan calls to beef up embassy security this past week following violence at U.S. embassies and the death of the U.S. ambassador in Libya.

The cuts include roughly $54.7 billion a year from U.S. defense spending, beginning in January.

A senior administration official said the cuts would lead to a sizable reduction in the federal workforce, though he didn’t have specific figures. Federal pay would be cut as well. For example, total salaries at the Securities and Exchange Commission would be cut 8.2%, or $108 million a year.

Some federal spending is exempt from the cuts, including the pay of military service members and Social Security and Medicare benefits.

The package of cuts is “a blunt and indiscriminate instrument. It was never intended to be implemented,” the administration official said in a conference call with reporters. “And it is not a responsible way to achieve deficit reduction.”

Lawmakers from both parties say the spending cuts should be replaced with another deficit-reduction plan, but so far Democrats and Republicans haven’t been able to reach an agreement.

The White House and Democrats want any deal to include more tax revenue, while many Republicans want to block the cuts to military programs and make more reductions on social programs like food stamps.

The report “highlights the crippling effect these reductions will have on our nation’s security and underscores the urgent need for the president to work with congressional Republicans to replace these destructive cuts,” Senate Minority Leader Mitch McConnell (R., Ky.) said.

But Democrats said the report puts the onus on Republicans to agree to tax increases to avoid the sharp reductions in military spending.

“What Republicans aren’t saying when they are yelling and screaming about these cuts is that they helped pass them into law and that they can just as easily help make them go away,” said Sen. Patty Murray (D., Wash.). “But thus far, they have been unwilling to face up to the reality that it will take a balanced approach to make that happen.”

Lawmakers have said that earnest negotiations to address the looming spending cuts aren’t expected to begin until after the election on Nov. 6. Discussions to replace the spending cuts are expected to be packaged with negotiations about the expiring Bush-era tax cuts and could be combined into a larger fiscal package at the end of the year.