Congress digs in for sequester battle -- again

Speaker of the House John Boehner, Senate Majority Leader Harry Reid, House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell. Roger Wollenberg/Getty Images

More than two months after passing a short-term fix to avoid a devastating set of across-the-board spending cuts, Congress this month finds itself locked in a familiar game of chicken over the so-called "sequester" - and with just 25 days to come up with a new solution, there's little evidence any progress has been made.

With a March 1 deadline looming before the December deal expires, Congress faces yet another round of painstaking negotiations over a way to avert the $1.2 trillion worth of reductions, which are spread equally over defense and domestic non-defense spending over the course of 10 years. And while the sequester package was never intended to go into effect - in fact, it was designed to be so potentially devastating as to force Republicans and Democrats to on an alternate solution to reduce the deficit - the political atmosphere in Washington has been so bitterly partisan as to make any compromise near impossible.

Now, with just a few weeks left to act, defense officials are urging Democrats and Republicans to find a way to bridge their differences.

"If Congress stands back and allows the sequester to happen, it would be a shameful, irresponsible act," said outgoing CIA Director Leon Panetta, in an appearance on NBC's "Meet the Press."

Panetta, who has been an outspoken critic to the sequester cuts from day one, delivered a sharp warning to Congress as to the impact such reductions would have on the military's ability to perform.

"If sequester goes into effect, and we have to do the kind of cuts that go right at readiness, right at maintenance, right at training, we are going to weaken the United States and make it more difficult to respond to crises," said outgoing CIA Director Leon Panetta, in an appearance on NBC's "Meet the Press."

Economists have been equally dire in their assessments of economic impact of letting the sequester cuts go into effect, and in an interview last night with CBS News' Scott Pelley, President Obama argued that they had already had an impact on the nation's economic growth. He attributed findings in a new GDP report, which showed the U.S. economy shrank 0.1 percent in the fourth quarter of 2012, to a 22 percent cut in defense spending, and the "cloud of crisis" it created.

"I don't know if it will push the country into recession," he said, of the sequester cuts. "Washington cannot continually operate under a cloud of crisis... We can't afford these self-inflicted wounds, and there is a way for us to solve these budget problems in a responsible way, through a balanced approach that the vast majority of people agree with. If we do that, there's no reason we can't have really strong growth in 2013."

Despite the general sense of urgency over averting the cuts, there has been little word of any deal-making in Washington, and both sides appear far apart on the ideological tenets of any potential compromise. And another battle looms that promises to become conflated with the larger debate: Congress must pass a new federal budget plan before March 27, when the current continuing resolution to keep the government funded runs out.

On the House floor this afternoon, Speaker John Boehner, R-Ohio, went after the president for missing a deadline today to submit his budget to Congress, and suggested, "one example of something the president's budget could have addressed is his sequester."

"Now twice the House has passed legislation to replace the president's sequester with commonsense reforms that would reduce spending and preserve and strengthen our safety net for future generations," Boehner said. "We spread it all out. We have done our work.

"...But to replace the president's sequester, we need our Democrat colleagues to get serious about spending," he continued. "I wish I could give the American people more cause for optimism, but we see the president's budget is late, and the Senate hasn't passed a budget in nearly four years."

Already, a fight is brewing over Democratic calls for more revenues in the new budget.

Mr. Obama told Pelley yesterday that while he isn't planning any more tax rate hikes for now, "there is no doubt we need additional revenue, coupled with smart spending reductions, in order to bring down our deficit."

"There's a lot of waste in the system, and there are things that we can do to reduce health care costs," he said. "Can we close some loopholes and deductions that folks that are well connected and have a lot of accountants and lawyers can take advantage of, so they end up paying lower rates than a bus driver or a cop? Can we close some of those loopholes? If you combine those things together, then we can not only reduce our deficit, but we can continue to invest in things like education, and research and development ... Without raising rates again."

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