WASHINGTON — Key U.S. congressional Republicans are calling a comprehensive White House deficit-reduction plan a solid first step toward striking the kind of bipartisan deal that would substantially lessen defense spending cuts.
The White House last week quietly unveiled details of President Barack Obama’s plan to further shrink the federal deficit by $1.8 trillion. The Obama administration’s blueprint, expected to be the backbone of next month’s fiscal 2014 budget request, proposes trimming future Pentagon spending by only $100 billion in 10 years — $400 billion less than mandated under sequestration.
It calls for the same amount in domestic cuts.
For the Pentagon, the Obama plan would not only remove the nine more years of the so-called “meat-ax approach” of sequestration, which calls for cuts of around $50 billion annually for nine more years. It also would delay the $100 billion in defense cuts it proposes until 2019, meaning it would give lawmakers five budget cycles during which to replace them or void any future legislative language ordering them.
“The president’s budget ... does deal with the deficit,” DoD acquisition chief Frank Kendall said March 20 during a National Defense Industrial Association-sponsored conference in Springfield, Va. “It does do the things that need to be done, if it were passed, to avoid sequestration.”
A defense official told Defense News the Pentagon’s 2014 budget plan will not include the $50 billion-per-year sequestration cuts because the White House and its Office of Management and Budget have not issued such instructions.
The White House, after several messy and failed attempts at negotiating with congressional Republican leaders, is trying a new strategy. Obama and his top aides are reaching out to rank-and-file Republicans in the Senate, believing that starting talks toward a sequester-voiding “grand bargain” with House GOP leaders will go nowhere.
Top Republicans in both chambers, in a series of interviews, applauded the White House’s plan as a positive first step, with most pledging to give it serious consideration.
“I very much, as I’ve said to the president, do appreciate the fact they put some entitlement reforms in there, and I support those,” said GOP Sen. Bob Corker of Tennessee, one of the dozen Republican senators courted by Obama during a wonky March 6 dinner at Washington’s posh Jefferson Hotel. “That’s new.”
Corker called the Obama plan “a beginning point.”
The plan unveiled last week appears aimed at attracting some pro-defense Senate Republicans, such as longtime Armed Services Committee member Sen. John McCain of Arizona, who worried about sequestration creating a “hollow military.”
“I would consider any plan that avoids sequestration,” McCain said in a brief interview March 20. He also attended the March 6 dinner.
The plan appears to target other Senate Republicans who, like Corker, want deeper cuts to domestic entitlement programs. For instance, Obama is proposing $735 billion in entitlement program cuts, an apparent olive branch aimed at those 12 GOP senators the White House calls the “caucus of common sense.”
But Republicans made clear the Obama proposal is merely an opening offer.
“They know we [GOP senators] think that’s not near enough,” Corker said. “We’ve had a frank conversation about this.”
The White House plan also piqued the interest of some key House Republicans.
“If [Obama has] got a sequestration-replacement plan, certainly we have a passing interest in that,” Rep. Hal Rogers, R-Ky., chairman of the House Appropriations Committee, told Defense News on March 21, minutes after the lower chamber approved a measure to avoid a government shutdown that he helped craft.
Asked if the White House plan — which congressional Republicans have demanded for months — is, to him, a step in the right direction toward turning off sequestration, Rogers replied “sure.”
The chairman of the House Appropriations Defense subcommittee, Rep. John Young, R-Fla., a longtime pro-military lawmaker, also welcomed the White House plan. Young said during a brief March 21 interview that he wants to find a way to replace the sequester cuts with other deficit-reduction measures.
Sen. James Inhofe, R-Okla., ranking member of the Senate Armed Services Committee, told Defense News on March 20 he would be open to $100 billion in defense cuts as a way to avoid the final nine years of the $500 billion sequester cut.
“If you isolate the $100 [billion], obviously I would support that,” Inhofe said. “But I doubt it’s going to be quite that easy. … I anticipate [White House officials] are using that as a carrot to get tax increases. But that sure has my attention.”
How the Plan Works
Sources say the 2014 budget plan — due to Congress on April 8 — replaces the $1 trillion in deficit reduction achieved by sequester cuts in two ways.
One is through “more than $600 billion” in new federal revenue that the administration expects will be collected via higher tax rates imposed on the wealthiest Americans by the January fiscal cliff-avoidance law, sources say.
The other way is through $500 billion labeled “interest savings” on a summary of Obama’s plan posted on the White House website.
Having already put $2.5 trillion in deficit-reduction steps into law, if the president and congressional Republicans can strike a deal that hits the $1.8 trillion target, Washington would have shaved $4.3 trillion from the deficit since 2011.
The defense official said the coming 2014 Pentagon budget request will indeed ignore sequestration, and instead assume the White House’s $1.8 trillion deficit-reduction plan — or something similar — is adopted later this year.
“The president has put forward a specific plan that will avoid sequestration’s harmful budget cuts and reduce the deficit in a balanced way — by cutting spending, finding savings in entitlement programs and closing tax loopholes,” according to the White House’s website.
Despite some senior Republicans’ openness toward the Obama plan and coming budget approach, make no mistake, it already is being met with resistance on Capitol Hill. GOP members bristled when told of the new revenues it proposes.
“Sounds like a non-starter to me,” Minority Whip Sen. John Cornyn, R-Texas, told Defense News on March 20. “We’ve done the revenue part” in the January fiscal cliff bill, “so it just sounds like the same ole-same ole.”
Asked about the new revenues the White House plan proposes, Inhofe signaled opposition.
“I want to see those first,” he said, “but I seriously doubt I’d support those.”