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Climate on Capitol Hill Continues To Shift Toward Spending Cuts

Jan. 4, 2013 - 12:53PM   |  
By JOHN T. BENNETT   |   Comments
House Minority Leader Nancy Pelosi (D-Calif.) speaks to the media during her weekly news conference Jan. 4. Pelosi told reporters that she and her fellow House Democrats are on board with congressional Republicans' coming quest to significantly trim spending.
House Minority Leader Nancy Pelosi (D-Calif.) speaks to the media during her weekly news conference Jan. 4. Pelosi told reporters that she and her fellow House Democrats are on board with congressional Republicans' coming quest to significantly trim spending. (Mark Wilson / Getty Images)
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The climate on Capitol Hill continued on Jan. 4 to shift toward big federal spending reductions, a potentially unnerving shift for the Pentagon and U.S. defense sector as lawmakers begin the search for an accord on cuts to pare the deficit.

Minority Leader Nancy Pelosi of California told reporters she and her fellow House Democrats are fully on board with congressional Republicans’ coming quest to significantly trim the amount Washington spends each year.

“I don’t think Democrats are saying, ‘We won’t do spending cuts’,’” Pelosi said during her weekly press conference. “We’ve already agreed to over $1 trillion in cuts in the [2011] Budget Control Act.

“We all know that how we proceed must be in three parts: Revenue to deduce the deficit, [economic] growth to bring money into the Treasury, and cuts — establishing our priorities in a way that does not harm our future growth,” she said. “None of us is saying we’re not going to talk about spending cuts.”

“Of course everybody thinks there should be spending cuts. We should subject every dollar, whether it is domestic or defense, to the harshest scrutiny as to whether the taxpayer is getting his or her dollar’s worth.”

The fiscal cliff bill passed earlier this week and signed into law Jan. 2 by President Obama includes a two-month sequestration delay, setting a new March 1 deadline for passage of at least $1.2 trillion in deficit-reduction measures. That amount of deficit-reduction is needed to turn off the defense and domestic sequestration cuts. If Congress and Obama again fail to do so, sequestration would take effect March 27, according to the law.

Efforts to cobble together those deficit-cutting components will take place at the same time Obama and lawmakers are engaged in what is expected to be a bitter fight over raising the nation’s borrowing limit.

And some experts, like Todd Harrison of the Center for Strategic and Budgetary Assessments, said because the sequestration debate will be a part of the coming political brouhaha over raising the federal government’s borrowing limit, the odds are that the twin $500 billion cuts to planned domestic and defense spending will be triggered in March.

Others, like Loren Thompson of the Lexington Institute, believe Congress will strike a deal on both sequestration and the debt ceiling because Washington always has answered such questions by simply borrowing more money.

Republicans are ready for the debt-ceiling fight, eager to press Obama and congressional Democrats for big federal spending cuts.

“Democrats now have the opportunity — and the responsibility — to join Republicans in a serious effort to reduce Washington’s out-of-control spending,” Senate Minority Leader Mitch McConnell, R-Ky., said. “That’s a debate the American people want. It’s the debate we’ll have next. And it’s a debate Republicans are ready for.”

And since the defense budget is such a big slice of the federal-spending pie, that could spell trouble for the Pentagon’s base budget, some sources say.

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