Obama Vows to Stop the Sequester but Can He Deliver?
Business + Economy

Obama Vows to Stop the Sequester but Can He Deliver?

iStockphoto/The Fiscal Times

President Obama declared for the first time last night that he would block the large, automatic cuts in defense set to take effect early next year after Republican rival Mitt Romney sharply criticized the administration for weakening U.S. armed forces just as the nation is facing a nuclear threat from Iran and growing tumult in the Middle East.

The president’s remarks during his third and final debate with Romney in Boca Raton, Fla., caught Romney and other GOP leaders by surprise, and may have been aimed at reassuring defense industry workers in Virginia, Ohio and other key battleground states two weeks before the election.

A formidable array of players, from Defense Secretary Leon Panetta and House Armed Services Committee Chairman Buck McKeon, R-Calif., to former Vice President Dick Cheney and the CEOs of Lockheed Martin,  Pratt & Whitney and EADS North America, have mobilized against the roughly $500 billion in  long-term across-the-board defense cuts that will kick in beginning in early January, absent congressional intervention.

Romney charged last night that the combination of those automatic cuts and an additional $400 billion of defense savings previously agreed to by the president “is making our future less certain and less secure.” Obama is seeking to shrink defense spending to 3 percent of GDP or less in the coming years, while Romney wants a minimum of 4 percent.

Though the president until now has had little to say about the automatic cuts or “sequestration,” last night he blamed Congress for the cuts and flatly declared that they would not happen. “First of all, the sequester is not something that I proposed,” Obama said. “It’s something that Congress has proposed. It will not happen. The budget that we’re talking about is not reducing our military spending. It’s maintaining it.”

Obama didn’t explain further how he intends to block the automatic cuts – and the White House didn’t respond today to a request for additional information. 

A spokesman for Senate Republican Leader Mitch McConnell told Reuters today, "We were all surprised by the President saying that the sequester ‘will not happen,' given that he still hasn't presented a plan to make sure it ‘will not happen.'"

While the GOP-led House has already taken action, Democrats in the Senate haven't even passed a budget, and the president has presented no plan to prevent the defense cuts, according to the aide. The divided Congress is controlled in the House by Republicans and the Senate by Democrats.

Kevin Smith, a spokesman for House Speaker John A. Boehner (R-Ohio), said, "If the sequester isn't going to happen, as he says, will the president finally offer a plan to solve the problem? For the past year, the president has refused to show any leadership in resolving the sequester he proposed, so forgive us if we have doubts about his newfound desire to tackle the issue."

David Plouffe, White House senior adviser, told reporters in the spin room after Monday night's debate that Obama was merely expressing the same desire as everyone else. "No one wants it to happen. ... No one thinks it should happen," said Plouffe.

Danielle Pletka, a foreign policy and defense expert with the conservative-leaning American Enterprise Institute, said today she was stunned by Obama’s declaration because “I haven’t seen him lift a finger to stop the cuts” until now. “I think he thought that was all he needed to say to reassure voters in Ohio and in Virginia that their [defense-related] jobs were secure – and I don’t think voters are that dumb,” Pletka told The Fiscal Times. “You know, you can’t eat an assertion.”

Moreover, for the third time in a debate setting, neither Obama nor Romney mentioned the larger issue of a looming fiscal cliff, when a combination of  $607 billion worth of spending cuts and tax increases are set to take place beginning next Jan. 2 – posing the threat of another recession and widespread layoffs in the defense and aerospace industry.

“Well, it’s pretty stunning that it didn’t come up and it’s certainly not clear to me why no moderator raised the question,” said William A. Galston, a former policy adviser to President Bill Clinton and an expert on domestic policy and political campaigns. “I think with regard to the urgent fiscal question facing the country, this campaign has missed an opportunity to educate the public to these issues. As a result, these will come as a big surprise to the public.”

Precisely why Obama and Romney talked around the topic – or why the moderators of the three debates between the presidential candidates largely focused on the economy and domestic issues didn’t choose to bring it up – is far from clear. Romney repeatedly touched on the fiscal cliff tangentially by insisting he would oppose the deep cuts in the Pentagon budget required under sequestration, but never made the connection with the feared year-end train wreck. However, he and congressional GOP leaders favor buying time to negotiate a major overhaul of the tax code and entitlement programs by extending the expiring Bush-era tax cuts and blunting or eliminating cuts in defense spending for six months.

“Basically, a new president (if Romney were elected) won’t have the time in January and the expertise and the personnel to craft an entire fiscal plan in great detail,” said J.D. Foster, an economist with the conservative Heritage Foundation. “So the approach would have to be, Prevent bad things from happening and then, once we have our personnel and policy in place, we will be ready to run for a long term solution, whatever that might be.”

Obama, meanwhile, has kept his own counsel on how he would navigate the end-of-the-year budget and economic crisis – possibly because what he has in mind sounds more like hardball politics than a quest for a bipartisan solution.  The Washington Post reported last week that Obama is prepared to veto legislation to block year-end tax hikes and spending cuts unless Republicans bow to his demand to raise tax rates for the wealthy, administration officials said.

Freed from the political and economic constraints that have tied his hands in the past, Obama is ready to put pressure on Speaker Boehner and other Republican leaders, who have so far successfully resisted a deal to control the $16 trillion debt that includes higher taxes, according to the Post report. In the days after the November election, the tables will be turned: Taxes are scheduled to rise dramatically in January for people at all income levels, and Republicans will be unable to stop those automatic increases alone.

If he wins reelection, Obama may finally be able to dictate the terms of a bipartisan debt-reduction deal. And if he loses to Romney, Obama could make sure that tax rates rise before he hands over the keys to the White House on Inauguration Day in late January. However, Galston, the former Clinton adviser, questions whether the currently constituted GOP-controlled House and Democratic Senate could reach agreement on legislation to send to the White House for Obama’s signature.

“Unless Democrats crack and vote with the Republicans to extend all [the Bush-era tax cuts], I don’t know how they do that,” said Galston, now a senior fellow with the Brookings Institution.
Marion C. Blakey, president of the Aerospace Industries Association, expressed approval of Obama’s and Romney’s statements on sequestration last night. “It’s good to see basic agreement between the candidates on the need to find an alternative to sequestration budget cuts that will compromise U.S. national security and put millions of Americans out of work beginning in just 71 days,” she said. “We need to find a solution immediately.”
“Turning our backs as we hurtle toward the ‘fiscal cliff’ will only assure that our country’s economy will plunge into recession, while ignoring the needs of the warfighter who is the tip of the spear when foreign policy is challenged abroad,” Blakey added. “We can’t balance the budget on the backs of our military, and yet more cuts to defense investment will erode our security and undercut one of the last bastions of American manufacturing strength.”