Sen. Levin: Military Should Not Give Up on Sequestration

There is no chance that Congress will repeal sequestration before he retires, but Sen. Carl Levin, D-Mich., insists that lawmakers might find a way to relieve the military and civilian agencies from automatic budget cuts next year.

“My hunch is it will be repealed or reduced, one way or another,” said Levin, chairman of the Armed Services Committee.

“I hope we can get rid of sequestration,” he said Sept. 24 during a breakfast meeting with reporters. Regardless of the outcome of the mid-term election, it is conceivable that Republicans and Democrats could find some common ground on which to build a budget deal that spares both defense and nondefense agencies from automatic cuts, Levin said.  

The next round of spending cuts will begin Oct. 2015, unless Congress takes action. “When sequestration hits, people are going to start scrambling around,” he said.

Levin is skeptical that the war on the Islamic State that President Obama launched last week — and its strain on the Pentagon’s budget — will break the political deadlock over defense cuts. “It might help,” he said. But he acknowledged that the political dysfunction that resulted in sequestration has not gone away.

Levin has been a long-time proponent of eliminating corporate tax loopholes to offset some, if not all, of the spending cuts mandated by the Budget Control Act — nearly $1 trillion split equally between defense and nondefense agencies. He intends to keep pushing this agenda even after he leaves Congress.

“Even if I can’t succeed, I’m determined, not sure in what form, to find a way,” Levin said. “If nothing else, I will leave a roadmap behind for how we can get rid of sequestration using tax avoidance schemes to pay for it,” he added. “I hope to have some success in this area before I’m done.”

Levin announced in March he would not seek re-election in 2014. The 78-year-old senator has been in Congress since 1978.

There is enough unhappiness about sequestration on both sides of the aisle to motivate members to support some form of repeal, he said. “We have done real damage in terms of cutting discretionary spending in this country.”

Any compromise will have to spare both defense and nondefense, he said. Republicans, however, will have a tough time rounding up support in their ranks for nondefense cuts, Levin noted. It will be up to the leadership to make the case that undoing sequestration could be a political winner in these times of war when the public tends to support military spending. If the GOP wins the Senate in November and controls Congress for the remainder of the Obama administration, said Levin, it will be up to its leaders to figure out how they can “responsibly” get rid of sequestration without raising the national debt.

“How it should be done is by eliminating unjustified tax avoidance schemes,” Levin said. “I haven’t given up on that. ... After the election maybe the Republicans can take this up.” Democrats, too, he said, have to get over their fear of cutting domestic benefits programs.

Levin has been sympathetic to military officials who have paraded through his office to plead their case against sequestration. He tells them, however, that making this issue all about the military is not going to move the needle. With much of Congress leaning fiscally conservative, the key is finding a way to offset the cuts with politically acceptable sources of new revenue.

The military might not care about corporate tax loopholes, but it should, said Levin. His office identified 15 to 20 tax breaks that could be eliminated with bipartisan support. “These loopholes have no economic purpose except to avoid taxes.” During a hearing of the Senate Permanent Subcommittee on Investigations, Levin noted, it was revealed that one hedge fund alone, Renaissance Technologies, had avoided $6 billion in federal taxes over 10 years by timing transactions so they would not be subject to short-term capital gains.

Topics: Defense Department, DOD Budget