THE RESET: March 1 spending cuts now seem likely
A month has passed since Congress and President Barack Obama narrowly averted a New Year's "fiscal cliff" of tax hikes and spending cuts. Another fiscal crisis is less than a month away. But while the earlier cliff drew mounting levels of fear and panic, the massive spending cuts due March 1 are being viewed with resignation by many lawmakers.
There no longer seems much doubt that the spending cuts, known in the nation's capital as "the sequester," will occur in some form.
The sides seem too far apart to find much common ground in a budget deal. So it's now mostly a matter of how — and if — the formula can be modified to safeguard national defense and/or attach some higher taxes.
"There is no doubt we need additional revenue, coupled with smart spending reductions, in order to bring down our deficit," Obama told CBS in a pre-Super Bowl interview Sunday.
He would close loopholes enjoyed mostly by the wealthy rather than further increase tax rates.
In a similar vein, Senate Majority Leader Harry Reid said Democrats "without question" will demand more tax revenue if any attempt is made to alter the spending-cut formula. "There are a lot of tax loopholes that should be closed," he told ABC.
Many GOP lawmakers see the cuts as the surest way to reduce federal spending — but oppose pairing them with higher taxes.
The cuts are portrayed as across-the-board but would fall hardest on military programs since the sequester formula generally exempts "entitlement" payments such as Social Security, Medicare, Medicaid, food stamps and veterans' benefits.
They would follow an earlier round of deep Pentagon spending cuts.
Outgoing Defense Secretary Leon Panetta argues it would be "shameful and irresponsible" for Congress to allow mandatory cuts that he says could jeopardize U.S. readiness. "In a world of responsible politics, it would not happen."
Obama agreed: "Washington cannot continually operate under a cloud of crisis."
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