Chances for Sequester Relief Fade as Post-Midterm Showdowns Take Shape

By Sandra I. Erwin

SIMI VALLEY, Calif. – Anyone who expects the new Republican majority on Capitol Hill to lift the lid on military spending is either naïve or oblivious to the obvious, a panel of current and former lawmakers said Nov. 15.

It would take an extraordinary national security crisis on a par with the 9/11 attacks for Congress to roll back the spending restrictions it passed in 2011, said former House Majority Leader Eric Cantor, who was one of the architects of the Budget Control Act that cut $1 trillion from federal agency budgets.

Although much has changed in Washington since 2011, the same deep divisions that led to the BCA showdown are still in place, Cantor said Nov. 15 at the Reagan Defense Forum, held at the Ronald Reagan Presidential Library.

“There are real differences between the two parties on revenues and entitlements,” said Cantor, a onetime candidate for House speaker who was defeated in the Virginia Republican primary in June and is now a Wall Street adviser. 

“I don't see a path where you're going to get bipartisan relief on BCA caps,” he said. “There needs to be bipartisan agreement even though there's a Republican majority in Congress.” Only a calamitous national security event would “shake Congress out of its funk.”

Things might be different if Senate Republicans had a 60-vote filibuster proof majority, said Cantor. “The sequester is not a reconcilable item.” That means that revoking the Budget Control Act cannot be done by reconciliation, a legislative procedure that requires only 51 votes. “There needs to be 60 votes in the Senate to undo the BCA.”
The Pentagon is just going to have to learn how to do more with less, Cantor said. “That's what the private sector does.” 

Another reason why Congress is not likely to touch the BCA is that it gives lawmakers leverage against the Obama administration as the president threatens to pass immigration reform through executive orders rather than by seeking legislation. There is brewing anger on the Hill over the immigration issue, which is creating an unfavorable climate for budget deals. The lame duck Congress will try to avoid a fiscal cliff or a government shutdown Dec. 11 when current funding for federal agencies runs out. Beyond that, there are no visible signs of any path toward a long-term budget deal. Also complicating the picture are the looming 2016 presidential primaries. Several GOP senators are poised to enter the presidential sweepstakes and Congress will not want to take tough votes on federal spending or national security that would cut GOP candidates off at the knees. Likely Republican candidates include libertarians, isolationists and “boots on the ground” hawks. The thinking on the Hill is that the new Congress will only have six to eight months to take action on major items like defense spending before the kickoff of the 2016 race. 

Cantor noted that there is a “diversity of opinions” in the 2016 presidential field and there is nothing close to an “emerging consensus on national security” in the GOP. That should dampen any expectation about Congress rolling back the sequester, he said. Besides Republican resistance to higher spending, there is also still a “hangover from Iraq and Afghanistan,” said Cantor. Lawmakers have not been able to make a successful argument to voters that American leadership in the world is tied to military strength, he said. “The broader question about defense is whether on both sides we can agree that since World War II, it's been the military capability of this country that has been directly related to our global leadership.”

Rep. Joaquin Castro, D-Texas, said Democrats, even in the minority, have sufficient leverage to stop Republicans from raising military budgets. Democrats' big hangup is that Republicans want to lift the sequester only for the military. “We support lifting sequestration also in other areas like healthcare and education. Can we have an agreement where we lift it for the military and for other parts of the budget?” he asked. “That would be the foundation of an agreement if there is one.”

There was little to no indication from the midterm election returns that the public agrees with Republican ideals, let alone with those of GOP defense hawks, noted Rep. Ken Calvert, R-Calif. “The country wants economic growth, job creation. We have a couple of years. We're on the clock. That's my read on what’s going on.”

Also boding badly for defense spending is Congress' unwillingness to tackle Medicare and other mandatory spending that is compressing the defense budget, said Cantor. “Reforms have been rejected. Where do we find the middle? Republicans haven't changed their position on taxes.”

Only Sen. John McCain, R-Ariz., a staunch defense hawk, seems determined to undo the spending restrictions on the military. “We have to fix it,” McCain said at the Reagan forum. An emerging pro-defense Republican wing in the Senate will push to get rid of the sequester, he said. That group includes McCain, Sen. Lindsey Graham of South Carolina, Sen. Kelly Ayotte from New Hampshire, and newly elected Sens. Tom Cotton from North Carolina, and Dan Sullivan of Alaska. Another potential member of the wing, McCain said, is newly elected Iowa Senator Joni Ernst, who got voted into office on a deficit-slashing anti-pork platform but also is strongly pro-defense. “I promise you that we will make it [fixing sequestration] our highest priority,” McCain told the crowd of mostly

Republicans and defense executives at the Reagan presidential library.

In the defense industry, hopes of a budget agreement that would reverse the cuts appear to be fading. Some executives argue that, while the level of spending is important, what would really cheer them up is to have a long-term fiscal picture and some assurance of fiscal stability. 

Washington is now all about the “short game,” whereas in this industry, “we play the long game,” said Mike Petters, president and CEO of Navy shipbuilder Huntington Ingalls Industries. “We build our ships not for this president or the next, but the one after next,” Petters said. “I'm really concerned as I watch this process that we're institutionalizing the short game whether it's the daily news, the weekly reports, the quarterly earnings summaries, annual budgets,” he said. “It's really hard to be in a leadership position and have a discussion about what's good for the long term when you've got all the short term alligators speaking to you. Every day CEOs meet with investors and have a discussion about share prices today, versus how you're going to invest in your business for the long term.”

Topics: Defense Department, DOD Budget, Procurement