The Pentagon doesn’t have the same luxury that it did in fiscal year 2013. | REUTERS Year 2 of sequester: Gloom looming

Budget negotiators have a big reason to strike a deal this week: averting the pain from a second year of sequestration, which could make the first 12 months of spending reductions seem mild in comparison.

The looming cuts promise to hurt military troop readiness and limit FBI agents who keep tabs on terrorists, gangs and white-collar criminals. It’s not a pretty picture either for cash-strapped scientists already hamstrung tracking deadly diseases and educators who this year had to turn down more than 50,000 preschoolers.


Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.) don’t exactly have a sword of Damocles hanging over their heads if they fail to reach agreement by their Friday deadline. But the leaders of their chambers’ respective budget committees still have ample reason to act — and act now.

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Sequestration’s second year is projected to start in mid-January for the Pentagon, and the department doesn’t have the same luxury that it did in fiscal year 2013 to scrape money from unused accounts. Those funds are almost all dry now. For nondefense agencies, from the Education Department to the Environmental Protection Agency, the situation is equally stark.

“You don’t want to say the sky is falling unless there really is evidence, and in this case I think Year Two is going to be the sky falling,” said Hunter Rawlings, president of the Association of American Universities.

Dramatic cutbacks in government services from another round of spending cuts could help Murray and Ryan collect votes to get a deal through Congress. They’re already getting help from the Pentagon and military-minded members on the House Armed Services Committee who in recent days have been hosting private briefings for lawmakers and aides on what happens if the Defense Department has to endure tens of billions of dollars in additional cuts.

Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.) and Ryan have participated “so that they understand where we are and where we need to go,” said Rep. Rob Wittman, a Virginia Republican helping organize the closed-door meetings that include a simple warning: “The longer we put this off, the more we exacerbate the problem.”

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Selling every Republican on the need to end the sequester is no simple task. Conservatives see the cuts as a prized feather in their cap — born out of a high-stakes fight with Obama in 2011 over raising the debt ceiling — that shouldn’t be undone unless Democrats agree to make commensurate changes to mandatory spending programs.

“It’s the one rare time where both the House and Senate were able to get an agreement on the budget,” Louisiana Rep. Steve Scalise, chairman of the conservative Republican Study Committee, said in an interview. Scalise last week joined about 20 other leading GOP conservatives, including Reps. Mick Mulvaney of South Carolina and Jim Jordan of Ohio, in a letter to Boehner urging him to pass a continuing resolution before mid-January that keeps sequester funding levels in place.

But there’s also a large segment of lawmakers eager to end the cuts, or at least temper them for the next two years while congressional appropriators return to their cherished role crafting legislation that dictates the specifics for how agencies should spend their money.

And it’s not just about winning back the power of the purse. Votes are at stake, too. House Minority Whip Steny Hoyer (D-Md.) told reporters last week he would oppose a continuing resolution to keep the government open if House Republicans insist on leaving sequestration-era figures in place for fiscal year 2014, namely a $967 billion funding level for the Pentagon and domestic agencies.

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Moderate Republicans with large federal footprints back in their district feel strongly about ending the sequester, too.

“Here we are in this same situation — in a budget discussion that got us sequestration the last time. This is probably the right place to fix it,” said Rep. Jon Runyan, whose central New Jersey district is home to 44,000 people whose livelihoods center around Joint Base McGuire-Dix-Lakehurst.

Murray and Ryan aren’t commenting on the details of their talks, though POLITICO and other media have reported the lawmakers are near a deal setting spending levels for the next two years, including nearly $1 trillion for fiscal year ’14 covering both the Defense Department and the domestic agencies. It would replace sequestration with alternative, targeting spending cuts while skirting entitlement programs like Medicare, Medicaid and Social Security.

Ryan spokesman William Allison said the Wisconsin Republican “is committed to finding common ground” with Murray and “hopes both parties can work together to cut spending in a smarter way.”

A Senate Democratic aide said one of Murray’s motivating factors in the fiscal talks centers around “restoring some order and certainty” to Capitol Hill. That means getting the budget committees working off the same top line figures next year so that the appropriations committees can then do their jobs writing stand-alone spending bills.

Prospects of a short-term budget deal that increases spending this fiscal year — by about $45 billion, compared with the status quo of sequestration — has also raised hopes among advocates for everything from defense spending to health care and education.

“That’s certainly not ideal. But it’s a lot better than nothing,” said Joel Packer, executive director of the Committee for Education Funding. “Obviously, we want as many of the cuts to be restored as possible.”

“The good news is they are talking. They told us they are talking. And the decorum has gotten I think better,” said Reynaldo Tariche, president of the FBI Agents Association. His group met last week with aides to Ryan and Murray to describe what could happen at the FBI if the lawmakers can’t strike a deal: Ten to 15 days of furloughs, empty classrooms at the bureau’s Quantico, Va., training center and diminished capacity to respond to threats from terrorists and home-grown criminals.

The fallout goes well beyond the FBI if Murray and Ryan come up short.

First up, Congress would need to pass a continuing resolution by Jan. 15 to avoid the second government shutdown in four months. But that bill would leave government funding at fiscal year ’13 levels, putting the Pentagon’s budget $21 billion over its legal cap under the Budget Control Act. Enter the White House Office of Management and Budget, which would have to issue a sequester order to take back that extra money.

Defense Secretary Chuck Hagel told reporters last week he’s already preparing for the next round of sequestration by cutting 200 jobs in his own office as part of a broader plan to “realign defense spending to meet new fiscal realities and strategic priorities.”

For the domestic agencies, there’s good news and bad news. First the good news: Technically, there wouldn’t be sequestration because their funding under a CR would fall about $1 billion below their budget cap. So agencies would be spared the same sweeping across-the-board cuts from this year that hit every project, program and account.

Now the bad news: Status quo spending levels mean no wiggle room to address new priorities that have arisen despite consecutive years of declining budgets. In addition, budget accounts that agencies were able to tap into last year to keep basic operations going won’t be available. For example, Attorney General Eric Holder warned earlier this spring that he only had a one-time stash available to avoid furloughs for federal prison guards and FBI agents.

“In a great many cases, you can’t pull the same rabbit out of the hat twice,” said Scott Lilly, a senior fellow at the liberal Center for American Progress and a former Democratic staff director to the House Appropriations Committee.

Under a CR, Congress and the Obama administration also are expected to launch into another round of back and forth over just how much flexibility they already have — versus what’s needed via new legislation — to shift funding around within an agency.

Lilly expects quick action involving the Agriculture Department and Federal Aviation Administration, which earlier this year got the green light from Congress to use money from other accounts to keep meat inspectors and air traffic controllers on the job. Absent a Murray-Ryan deal, Lilly said some agencies would draw lawmaker complaints when they make their own difficult decisions on what gets cut.

“My guess is they go around and around on that,” he said. “A lot of it is dependent on the way people decide to use their discretion and the way Congress reacts to them using that discretion.”

NDD United, a coalition of 470 national organizations representing health, the environment, job training and other nondefense discretionary programs, met with aides to Murray and Ryan last week urging them to reach a deal that averts another tight year of budget caps. Without an agreement to halt the second year of budget caps, the group that includes the Aerospace Industries Association, Susan G. Komen for the Cure and the Natural Resources Defense Council warned of a sluggish economic recovery and further erosion of the country’s infrastructure, public health system, and critical scientific research and development efforts.

“The longer you go in raiding the R&D capacity of the nation, the harder it will be for us to ever recreate many of the institutions that are decaying under the sequester,” said Northrop Grumman CEO Wes Bush, who also serves as chairman of AIA, the defense contractors’ leading trade group. “There’s a time effect that I think is real important to understand here that is real, tangible and will cost a heck of a lot of money to ever recover from.”

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