Will A Government Shutdown Threat Determine The Winner Of The Sequestration Fight?

February 28, 2013 1:00 a.m.

If the consequences of indiscriminate defense and domestic spending cuts aren’t severe enough at the outset to force Congress and the White House to cut a deal in early March, the fight over sequestration could easily be swallowed by a different — more routine, but more pressing — budget fight.

Funding for the federal government expires on March 27, and if Congress doesn’t pass legislation to renew that funding, most government services will grind to a halt. The turbulence of sequestration will turn into the spiral-dive of a government shutdown.

These issues might seem wholly distinct. After all, sequestration emerged as a tool to force Congress into an agreement on taxes and entitlement spending, whereas a government shutdown would be the consequence of Congress failing to pass federal appropriations — a different category of spending altogether.

But because sequestration largely targets the same category of spending, it stands to reason that Democrats and Republicans will use the imperative of funding the government to press their distinct visions of how to replace sequestration.

Thus events of the next several days — particularly the public’s early reaction to sequestration — will determine whether the two issues blend into one, and whether the synthesis redounds to the benefit of one party or the other.At a glance, everything is lined up for Democrats to capitalize if and when the fight over funding the government subsumes sequestration. They’ve already won the public opinion battle over how to replace sequestration before it hits. And if voters respond angrily once sequestration comes into effect at the end of the week, their call for action to replace it with a balanced mix of tax increases and spending cuts will intensify.

The logical vehicle for addressing the public outcry would be legislation to fund the government. Congress could effectively override sequestration in a government funding bill and pair it with legislation to replace its automatic spending cuts either temporarily or permanently.

For that reason, some Democrats want the White House and Democratic congressional leaders to drive a hard line in the appropriations fight. But they’re not convinced an aggressive fight will pay off just yet.

“Anything the Speaker has regarding a CR [continuing resolution] or an omnibus I’m anxious to see it,” said Senate Majority Leader Harry Reid in response to a question from TPM at his weekly Capitol briefing on Tuesday. “I met with him a day or two before we had our break, we had a nice conversation, he hadn’t made up his mind yet what he was going to do. I told him whatever you do give me a little advanced notice I’ll see if I can work with our — we can see what they come up with.”

Reid’s congeniality is rooted in a belief, shared by the White House, that the consequences of sequestration will snowball gradually, and might not be severe enough by mid-March to justify a fight that could trigger a government shutdown.

So they’re eying a softer approach.

An aide to Speaker John Boehner (R-OH) said GOP leaders haven’t yet settled on an approach to funding the government. And House Republicans are divided enough that it’s unclear whether they could pass a stripped-down appropriations measure to begin with. Many Republicans would like to use the appropriations process to mitigate sequestration’s defense cuts, or eliminate them by cutting more deeply into domestic spending — a non-starter for Democrats.

But one option, which has piqued White House interest, according to two Democratic sources, would extend funding for federal agencies at current levels, and yet preserve sequestration, such that the cuts taking effect at the end of the week carry forward, possibly through the spring and summer.

That would insulate Republicans from allowing their intransigence over replacing sequestration to escalate into responsibility for a government shutdown, and thus represent a partial victory. Congressional Democrats and the White House would have to content themselves with the hope that public and interest group opposition to sequestration would build over time, and Republicans would ultimately agree to supplant it with legislation that includes higher taxes later in the year.

Reid made clear that even if the parties do reach an agreement to fund the government, it will preserve sequestration so that Republicans continue to face pressure to relent on taxes.

“We have had a law that’s in effect; it’s called sequestration,” Reid said. “Those cuts will go forward. They’re all cuts. I think we need some revenue to take the pressure off everybody. The American people agree with me. And until there’s some agreement on revenue, I believe we should just go ahead with the sequester.”

In other words, Democrats won’t allow Republicans to use a continuing resolution to enshrine sequestration’s lower overall spending requirement by apportioning the cuts in a less indiscriminate way.

But in the absence of a shutdown, some Republicans say they can weather the sequestration firestorm for months.

“It’s fine with me,” Sen. Bob Corker (R-TN) told reporters in response to a question from TPM on Tuesday. “I’d like to give [Obama] the flexibility — I don’t think he wants it — to manage through this a little bit better, but from my perspective it’s fine that we go through September.”

September isn’t arbitrary. It’s the end of the fiscal year. At that point, sequestration morphs from indiscriminate spending cuts into reduced overall government spending, with precise allocations for various programs and agencies falling to Congressional appropriators. The intentionally cumbersome sequestration turn into a more generalized kind of austerity.

That means Democrats basically have until September to win this fight. If there’s no government shutdown and GOP holds on until then, a lot of the pressure Republicans are feeling to relent on taxes will vanish.

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