Senate Democrats Unveil Proposal, but Sequester Likely To Take Effect
It appears as if the $85 billion in mandated spending cuts under sequestration -- including a 2% reduction to Medicare reimbursement rates -- will take effect, as observers see little chance of lawmakers reaching a compromise before the March 1 deadline, The Hill's "On The Money" reports (Swanson/Bolton, "On The Money," The Hill, 2/15).
The mandated cuts involve nearly $1 trillion in across-the-board reductions. 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, 2/14).
On Tuesday, McConnell said he believes "that the sequester is going to go into effect" and that he is "not interested in an eleventh-hour negotiation."
According to "On The Money," pressure to find other budget solutions might increase when the sequester cuts go into effect in March, causing defense and other government programs to be furloughed ("On The Money," The Hill, 2/15).
Senate Democrats Introduce $110B Proposal
Meanwhile, Senate Democratic leaders on Thursday unveiled a $110 billion proposal to replace the sequester cuts ("Federal Eye," Washington Post, 2/14).
The bill would raise about $54 billion in taxes by creating a 30% minimum effective tax rate for individuals with annual incomes between $1 million and $2 million and eliminating tax breaks that might be encouraging U.S. companies to move their operations overseas. The plan also would eliminate a tax loophole used by the oil industry (Cowan, Reuters, 2/14).
The bill also would implement $55 billion in spending reductions, with $27.5 billion cut from defense programs beginning in 2015 and $27.5 billion cut by eliminating agricultural subsidies.
However, it is unlikely the bill will pass because Republicans have vowed not to support any new taxes. In addition, some liberal Democrats criticized the bill for not including a higher ratio of tax increases (Bolton/Wasson, "On The Money," The Hill, 2/14).
Reaction to Senate Bill
According to the New York Times, Republican lawmakers dismissed the bill as a "gimmick."
McConnell said, "This is not a solution -- even they know it can't pass; that's the idea," adding, "It's a political stunt" (Weisman, New York Times, 2/14).
House Speaker John Boehner (R-Ohio) reiterated that the automatic cuts would take effect unless lawmakers found a way to balance the federal budget within a decade (Cowan/Ferraro, Reuters, 2/14).
However, the White House supported the proposal. White House press secretary Jay Carney called the bill a "balanced plan to avoid across-the-board budget cuts that will hurt kids, seniors, and our men and women in uniform" (New York Times, 2/14). Carney said the bill will force Republicans to choose whether to "continue to prioritize and protect tax loopholes" or "protect investments in education, health care and national defense" (Sink, The Hill, 2/14).
Democrats will be working throughout the coming days to increase public awareness of the looming spending cuts ahead of the vote on the bill. Senate Budget Committee Chair Pat Murray (D-Wash.) said, "We have a week and a half to get the public on our side" (Hook, Wall Street Journal, 2/14).
Federal Health Officials Say Cuts Would Be Devastating
In related news, NIH Director Francis Collins said "[a]ll diseases will feel the consequences" if the automatic spending cuts go into effect in March, the AP/Washington Times reports.
Collins said NIH would lose $1.6 billion in funding, or about 5.1% of its budget, leading to a reduction in medical research programs and the loss of about 20,000 jobs in university and other research laboratories.
Meanwhile, HHS Secretary Kathleen Sebelius said the cuts this year also would result in:
- 424,000 fewer available tests for AIDS;
- 7,400 fewer HIV patients being able to obtain Medicaid through the AIDS Drug Assistance Program;
- 2,100 fewer food manufacturing inspections by FDA; and
- 373,000 sick people not being able to receive mental health services (Neergaard, AP/Washington Times, 2/14).