Senate rejects sequester alternatives

USATODAY

WASHINGTON — The U.S. Senate failed to pass both Republican and Democratic alternatives to head off across-the-board spending cuts, nearly guaranteeing Washington will blow past a Friday deadline to avoid or replace $85 billion in cuts that threaten economic growth, military readiness and jobs.

The Democratic alternative would have replaced the cuts, known as the sequester, with a combination of a minimum 30% tax on millionaires and cuts to defense and farm programs. It failed 51-49.

"I really believe that the American people deserve better than what the Republicans in this building believe is the right thing," said Senate Majority Leader Harry Reid, D-Nev.

The Republican alternative would have transferred sweeping authority to President Obama to force him to determine how to implement $85 billion in cuts instead of the across-the-board spending cut affecting most reaches of the federal government. The sequester exempts military personnel accounts and the social safety net including Social Security and Medicare. The GOP measure also failed, 38-62.

"(Democrats) want it to fail, so they can go around the country blaming Republicans for a sequester the president proposed," said Senate Minority Leader Mitch McConnell, R-Ky.

MORE: Sequester is only the latest Obama-GOP budget battle

The president and congressional leaders will make a final attempt at a pre-deadline compromise at a White House meeting Friday morning, but top lawmakers conceded the prospects were dim for a deal in the short-term. "Hopefully, by the end of March, people will see the light and understand that we're not standing for this," said House Minority Leader Nancy Pelosi, D-Calif.

Both Senate proposals needed a 60-vote supermajority to pass, but either vehicle was dead from the start. The GOP-controlled House opposes the Senate Democrats' proposal because it raises taxes. GOP lawmakers do not support using new taxes to turn off the sequester; rather they are seeking alternative spending cuts and entitlement reforms.

"The American economy's going to create more tax revenue this year than any year in our history. We don't have a revenue problem; we have a spending problem. And it's time to get serious about it," said House Speaker John Boehner, R-Ohio.

The White House said the president would veto the Senate GOP proposal. "The best way to go about this is to postpone the sequester or agree to a bigger deal that eliminates it entirely in a balanced way," said White House spokesman Jay Carney, who said Obama continues to seek a $4 trillion deficit-reduction deal.The White House counts toward that about $2.5 trillion in deficit reduction already achieved in legislation in the previous two years.

After a two-month sequester delay agreed to in a January tax deal, the cuts are scheduled to start kicking in Friday. About $85 billion in cuts are scheduled through Sept. 30, the end of the federal fiscal year. In total, the sequester will trim $1.2 trillion in spending across the federal government over the next decade if left untouched.

The cutting mechanism is an unpopular budget tool that was included as a fail-safe in a 2011 budget law that required Congress to find $1.2 trillion in deficit reduction on its own. When they failed to do so in December 2011, it triggered a one-year countdown to the automatic cuts. In the past year, Congress and the White House have been unable to come up with an alternative to the sequester, or reach a long-term budget deal that would allow them to turn it off.

The cuts threaten to trim as much as 1.5 percentage points from projected 2013 economic growth and keep unemployment rates above 7.5% this year, according to the non-partisan Congressional Budget Office. The White House and federal agencies have also warned of potentially serious consequences: a weakened military, crippled air travel, decreased education funding, and job losses, among others.

As the cuts kick in Friday, work is underway in Congress and the White House on competing budget proposals.

The White House said they will send their budget blueprint to Congress in March. House Budget Committee Chairman Paul Ryan, R-Wis., is working on a budget to balance the books — with a $16.4 trillion debt — in just 10 years without raising taxes, while Senate Budget Committee Chairwoman Patty Murray, D-Wash., said the Democrats' budget would replace the sequester with "responsible" deficit reduction, which is expected to include proposals to raise more revenue.

The GOP-controlled House has not passed any sequester alternatives in this Congress, but the chamber is scheduled to vote next week on a massive funding bill that would at least give the Pentagon more flexibility to implement the cuts in an effort to lessen the blow. Reid said the Senate could consider similar action.

"We're open to any reasonable approach, yes. But remember, we cannot solve the problems of this country with cuts, cuts, cuts," he said.