The new Congress may end up tackling sequestration after all. | John Shinkle/POLITICO Report: W.H. could blunt sequester

The major shock waves from sequestration are avoidable — at least for the first few weeks.

That’s the gist of a new report by OMB Watch, which says the White House has the authority to effectively delay the effects of the across-the-board budget cuts by several weeks to allow time for Congress to cut a deal with either President Barack Obama or Republican Mitt Romney, depending on who wins the presidency.


In other words, the lame-duck Congress could be off the hook.

“Folks in general are underestimating the chances that sequestration will happen and overestimating the immediate effects of it,” said report author Patrick Lester, the group’s director for federal fiscal policy. “Sequestration won’t be an immediate disaster at all.”

For that reason, he explained, lawmakers have a powerful incentive to wait until January — after the 113th Congress is sworn in — to resolve the issue. In addition, he said, the expiration of the Bush tax cuts at the end of the year could greatly increase the odds of a deficit-cutting grand bargain in January — but not December.

That’s because any deal reached in December would probably increase taxes above current rates. But a deal reached in January — following the scheduled tax increases — would likely reduce taxes for most Americans below the rates set to take effect at year’s end.

“It could be the exact same package in January and December,” Lester told POLITICO. “But in January, it would be called avoiding sequestration and tax hikes. In December, it would be called a ‘tax increase.’”

In his report, Lester offers several strategies for pushing the onset of sequestration past Jan. 2, when the automatic cuts are set to begin kicking in — $1.2 trillion over 10 years, nearly equally divided between domestic and defense programs. First, he suggests, the White House Office of Management and Budget could schedule the brunt of the cuts for later in the fiscal year — in hopes that Congress will reach an alternative deficit-reduction agreement before then.

“OMB could decide to continue funding at current rates for the first few days or weeks of the new year, with offsetting reductions planned for later in the year, by which time sequestration may have been canceled,” Lester said.

He also said the Pentagon and other federal agencies could shore up critical programs through reprogramming requests, which are often used by the Defense Department to move funds from one program to another.

That might not be popular with a few key members of Congress, particularly Sen. John McCain (R-Ariz.), who often objects to defense reprogramming. But given that the government will be in extremis, Lester said, there might be no other way.

“Transfers and reprogramming authority will give agencies substantial ability to redirect cuts away from sensitive areas of spending,” Lester explained in the report.

And he said most federal agencies would be able to avoid immediate layoffs or furloughs. Instead, the agencies could freeze hiring and promotions.

“The administration has the ability to manage things and hold things together for a while,” Lester said. “All the things that would happen in the defense world would still happen — if sequestration holds past January.”