Congress May Delay Spending Cuts

Legislators weigh whether to postpone automatic cuts until March 2013.

Republican and Democratic congressional leaders are weighing whether to delay automatic federal spending cuts until March 2013, according to a House aide and industry officials who were briefed on the discussions.

The $1.2 trillion in automatic spending cuts over a decade, half of which would affect the Defense Department, are scheduled to begin in January 2013. At the same time, lawmakers must decide what to do about income tax cuts and other tax breaks scheduled to expire at the end of the year.

Leaders in both chambers are discussing whether to propose a catch-all bill that would delay the automatic cuts, fund the government through March or later and temporarily extend the George W. Bush-era tax cuts and other tax laws, said the House aide and industry officials, who asked to speak on condition of anonymity.

“It is being seriously considered as one of the options and there is no doubt about that,” Steve Bell, the senior director of the Economic Policy Project at the Bipartisan Policy Center, said in an interview.

The measure would follow a short-term stopgap spending bill to keep the government operating after Oct. 1, the people said.

The automatic cuts are required by the 2011 agreement to raise the U.S. debt limit. The cuts were designed to require Congress to find other deficit-reduction proposals to replace them. Lawmakers so far haven’t agreed on such a plan.

The second measure funding the government until March or later would carry the delay of the automatic spending cuts, according to the congressional aide and industry officials, who said they weren’t authorized to describe the option on the record.

 

Averting Cuts

The Republican-led House passed a bill in May to avert defense spending cuts and plans to vote in July on a measure to extend the expiring tax cuts. Neither measure will advance in the Democratic-controlled Senate. President Barack Obama opposes both proposals.

The outcome of the November election will help determine what action Congress will take to avert the automatic budget and tax changes. The stack of tax-and-spending issues creates the potential for a deal on fiscal policy, a partisan standoff or a congressional deal that staves off an immediate crisis by setting up another one in the future.

 

 

Bloomberg News

 

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