GOP Rejects Senate Democrats’ Plan To Avoid Mandated Spending Cuts
On Sunday, Republicans rejected a recent proposal by Senate Democrats to replace mandated spending cuts under sequestration with alternative spending cuts and tax increases, suggesting little chance that a compromise will be reached before the sequester takes effect in March, the Wall Street Journal reports (Peterson, Wall Street Journal, 2/17).
The mandated cuts involve nearly $1 trillion in across-the-board reductions, including a 2% reduction to Medicare reimbursement rates. In January, President Obama signed legislation -- negotiated by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) -- that delayed the cuts by two months, to March 1 (California Healthline, 2/15).
The Senate proposal would reduce the federal budget deficit by $110 billion over a decade (Wall Street Journal, 2/17). The proposal -- which would delay the sequester for 10 months -- would generate $55 billion in new revenue by imposing a minimum 30% tax rate on individuals with annual household incomes over $1 million, as well as reductions to farm subsidies and more gradual military spending reductions.
On Tuesday, Obama endorsed the Senate plan, which likely will be rejected when it is brought to a vote later this month because of Republican opposition (Hennessey, "Politics Now," Los Angeles Times, 2/19). Republicans generally favor rewriting tax laws and eliminating certain tax breaks as part of an effort to reduce overall tax rates and simplify the tax code (Wall Street Journal, 2/17).
ObamaÂ Pushes Lawmakers To Avert Sequester
Obama on Tuesday urged Congress to come to a deal to avoid the mandated spending cuts,Â Business InsiderÂ reportsÂ
He called the sequester a "meat-cleaver approach," adding that the cuts are "not an abstraction." He added, "Are you willing to see a bunch of emergency responders lose their jobs because you want to protect some special interest tax loophole?" He concluded that Congress has "a few days to "do the right thing" (LoGiurato,Â Business Insider, 2/19).
The White House over the weekend also pushed lawmakers to reach a deal. In appearances on Sunday, White House Chief of Staff Denis McDonough reiterated Obama's stance for a short-term budget agreement that includes increased tax revenue and alternative spending cuts, such as measures to reduce subsidies to prescription drug companies and raise premiums for higher-income Medicare beneficiaries (Wall Street Journal, 2/17).
Republicans Not Worried About Political Repercussions of Sequester
Although Obama has warned that the sequester would result in fewer food inspections and leave 373,000 individuals with serious mental illnesses without access to treatment, among other effects, Republicans have said they are not concerned with the political repercussions of allowing such cuts to take effect, The Hill reports (Hooper, The Hill, 2/19).
According to the Washington Post, the sequester's March 1 deadline to avoid across-the-board cuts "lacks punch" because there are few immediate effects, making Republicans disinclined to acquiesce to Democratic demands to raise tax revenue (Montgomery, Washington Post, 2/15).
Meanwhile, some Republicans view the across-the-board cuts as the optimal way to reduce federal spending (The Hill, 2/19). Rep. Tom Cole (R-Okla.) noted that Obama already "got an enormous amount of revenue with no spending cuts" in the fiscal cliff legislation. He added, "[T]he idea that we're going to raise taxes again within six weeks, that's a pretty hard sell" (Washington Post, 2/15).
Sequester Could Jeopardize SGR Fix
Experts say that efforts to create a bill to repeal the sustainable growth rate formula could be jeopardized by the partisan divide over the mandated spending cuts under sequestration, Modern Healthcare reports (Zigmond, Modern Healthcare, 2/15).
Hopes for repealing the SGR are high after a recent a recent report by the Congressional Budget Office lowered the 10-year cost estimate for doing so, from $245 billion to $138 billion (California Healthline, 2/14).
However, Anders Gilbert, senior vice president of the Medical Group Management Association, said if lawmakers "can't come together on the sequestration issue, it doesn't bode well for them to do anything on SGR, regardless of the price" (Modern Healthcare, 2/15).