Obama Signs Order To Cut $85B Under First Part of Budget Sequestration

On Friday, President Obama signed an order to initiate $85 billion in spending cuts under sequestration for the fiscal year ending on Sept. 30, the New York Times reports.

The mandated cuts are the first installment of nearly $1 trillion in across-the-board reductions, including a 2% reduction to Medicare reimbursement rates.

The Office of Management and Budget also released a 70-page memo detailing how each federal agency and program would be affected by the sequester (Shear, New York Times, 3/2).

Jeffrey Zientz, deputy director for management at OMB, said the president's order includes a:

• 7.8% reduction in discretionary defense spending;
• 5% cut to discretionary domestic spending;
• 2% cut to Medicare, which takes effect April 1; and
• 5.1% reduction to domestic mandatory programs.
• Meanwhile, Medicaid is among the programs that are exempt from sequestration.

Obama called the cuts "dumb" and "arbitrary" and said he hopes Congress will act in the coming weeks to replace them. Lawmakers have an opportunity to stop the automatic cuts during negotiations over a spending bill to replace a stopgap measure that expires on March 27 (Krawzak, CQ Roll Call, 3/1).

GOP Senators Request Sequester Details From HHS

Republican senators on Friday sent a letter to HHS Secretary Kathleen Sebelius asking how the agency plans to comply with cuts called for under sequestration, The Hill's "Healthwatch" reports. The letter was sent by Sens. Lamar Alexander (R-Tenn.), Orrin Hatch (R-Utah) and Jerry Moran (R-Kan.).

The lawmakers asked HHS for information on possible furloughs, the amount of time that employees spent on union business and spending on travel and conferences (Viebeck [1], "Healthwatch," The Hill, 3/1).

So far, HHS has not said how sequester cuts will affect employees at NIH, FDA, CDC, CMS or other agencies that it oversees. Bill Hall, director of HHS' News Division, in an email said the department will "continue to evaluate ways to minimize the negative impact of the sequester on our mission as well as on our employees," adding, "We do not have final plans or estimates of the impacts on HHS employees at this time" (Reichard, CQ HealthBeat, 3/1).

Advocates Warn of Public Health Risk

In related news, public health advocates are warning that sequestration cuts could put U.S. residents in danger, The Hill's "Healthwatch" reports.

In a statement released Friday, American Public Health Association Executive Director Georges Benjamin said the cuts would result in:

• 424,000 fewer HIV tests provided by CDC;
• 7,400 fewer patients having access to the AIDS Drug Assistance Program;
• 25,000 fewer breast and cervical cancer screenings for low-income women;
• Fewer food inspections;
• Reduced public health emergency preparedness capabilities; and
• Reduced mental health services (Viebeck [2], "Healthwatch," The Hill, 3/1).

American Medical Association President Jeremy Lazarus in a statement said both Medicare beneficiaries and providers will "feel real pain" because of the cuts, which will widen "the already enormous gap between what Medicare pays and the actual cost of caring for seniors."

Susan Turney, president and CEO of MGMA-ACMPE, said the organization also was "disappointed" by the cuts taking place, adding that they will "compound the already dire situation for medical group practices caused by the sustainable growth rate formula" (Zigmond, Modern Physician, 3/1).

Obama Brings Entitlement Cuts to Negotiating Table

On Saturday, Obama again said he would be willing to cut entitlement programs -- including Medicare -- to avoid budget cuts, according to White House officials, Reuters reports. Obama made calls to Republicans and Democrats to discuss entitlement reforms as a way to end the sequester.

Meanwhile, Gene Sperling -- the administration's senior economic official -- told CNN's "State of the Union" that Obama is "reaching out to Democrats who understand we have to make serious progress on long-term entitlement reform and Republicans who realize that if we had that type of entitlement reform, they'd be willing to have tax reform that raises revenues to lower the deficit."

Meanwhile, House Speaker John Boehner (R-Ohio) told NBC's "Meet the Press" that he would "absolutely" do what it takes to keep government agencies and programs running through the rest of this fiscal year (Cowan, Reuters, 3/4).

Sequestration Deal Could Take Months; Obama, Boehner Still at Loggerheads

On Friday, Obama said he would not call for a government shutdown in late March in an effort to pressure Republicans to replace the sequester cuts, Politico reports. Obama said that removing that threat could mean that a deal to replace the sequester "may take a couple of weeks, it may take a couple of months, but I'm just going to keep pushing on it."

However, Obama said any deal would have to include entitlement and tax reforms. Meanwhile, Boehner reiterated his opposition to any deal that includes increased revenue, saying, "[T]he president got his tax hikes on Jan. 1 ... This discussion about revenue, in my view, is over" (Sherman et al., Politico, 3/1).