U.S. Sen. Joe Lieberman, I-Conn., says there is little chance across-the-board budget cuts will be implemented in January, but he is not ruling them out.
“The odds are overwhelming that there won’t be a sequester, but it’s not impossible,” Lieberman said at a July 18 event hosted by TechAmerica, a technology trade association in Washington.
Lieberman serves as chairman of the Senate Armed Services airland subcommittee.
“We’re either going to do what’s right and have a bipartisan debt-reduction agreement, in whole or in part, and avoid sequester,” he said, “or we’re going to do what’s not very courageous and kick the can down the road.”
Because the congressional supercommittee failed in November to come up with a bipartisan agreement on how to reduce the deficit, $1.2 trillion in spending cuts over 10 years are scheduled to begin in January. They can only be averted if Congress passes an alternative deficit-reduction plan or approves legislation that would undo the sequester.
Of the $1.2 trillion, roughly half would hit the Defense Department, including roughly $54 billion in additional cuts in 2013. The remainder would come from nondefense discretionary spending, including funding for the Federal Aviation Administration and the Department of Homeland Security.
Just before the automatic spending cuts are set to begin, tax cuts first implemented by President George W. Bush are scheduled to expire in December. The combination of these two, plus a number of other fiscal events, is now being termed “the fiscal cliff” because of the detrimental shock it would cause the U.S. economy.
Lieberman said both sequestration and the expiration of the tax cuts do not require congressional action.
“If there’s one thing Congress is good at, it’s inaction and partisan disagreement,” he said, and for that reason, he is not ruling out the possibility of sequestration.
He said there is a lot of discussion and activity within the Senate around these issues, “but frankly, it’s hard to know at this point whether any of it’s going to be productive.”
The best-case scenario would be for Congress to pass a bipartisan debt-reduction plan that tackles the country’s major fiscal problems, Lieberman said, adding that such a plan could look something like the Bowles-Simpson proposal, which identified $4 trillion in deficit reduction through a combination of spending cuts and revenue increases over the next 10 years.
“That’s not going to happen before the election, but it might happen in the lame duck session,” Lieberman said.
The second best option would be to go for $1.2 trillion in deficit reduction, which would undo the 10 years of automatic spending cuts, he said.
While he’s supportive of efforts to undo only the first year of sequestration, Lieberman said he thought that was the “least we can do morally and responsibly.”
Sen. Kelly Ayotte, R-N.H., who appeared with Lieberman at the event, is advocating for such an approach.
She, along with a handful of Republican colleagues, is trying to convene a bipartisan working group in the Senate to identify $109 billion in spending cuts that would offset the first year of sequestration, therefore buying Congress time to reach a bigger deal later.
If Congress can pass such a measure before the election, “it would be a great statement to the American people,” said Lieberman, and “would still give us the opportunity to do more during the lame duck session.”