November 06, 2012

Lame Duck Looking Lamer as Fiscal Cliff Nears

The Washington defense establishment used to expect the life-or-death  question of sequestration would be decided after Tuesday’s elections, in  Congress’s year-end closing session. But the conventional wisdom has shifted:  Now it appears that no matter who wins the White House, the lame-duck Congress  is unlikely to have the last word.

That’s the consensus of defense watchers across Washington, several of whom  told POLITICO they even expect sequestration to take effect, at least for the  first few weeks after its official start date, Jan. 2. Billions of dollars in  defense spending ride on the outcome of the election, as President Barack Obama  has pledged to draw down the military, while Republican challenger Mitt Romney  has said he’d plus it up.

So what might an endgame look like in the war of  sequestration?

If Obama wins, Democrats could try to improve their negotiating position by  allowing sequestration to take effect and letting the Bush-era tax cuts expire — forcing Republicans into a corner on two top GOP priorities.

“Some people think the circumstances are better for a deal if you just let  everything expire first,” said Michael O’Hanlon, a senior fellow with the 21st  Century Defense Initiative at the Brookings Institution. “It makes a deal with  Republicans on taxes a lot more feasible because it doesn’t have to be couched  as tax increases.”

If Romney wins, Republicans also could improve their negotiating position by  waiting until January — once they take control of the White House — to haggle  with their Democratic counterparts.

“I would expect that the lame duck would not foreclose any options for  President-elect Romney,” said Mackenzie Eaglen, a resident fellow at the  conservative American Enterprise Institute and an informal adviser to the Romney  campaign.

From the defense establishment’s perspective, it all could add up to a  lame-duck session that would truly be, well, lame.

“I don’t see any reason to think people are going to be any more reasonable  during the lame duck,” said Patrick Lester, director of fiscal policy at the  group OMB Watch, which last week released a report on how the White House could  mitigate the early effects of sequestration.

“I doubt any budget deals are going to be cut between an outgoing president  and Congress,” he added. “Folks in general are underestimating the chances that  sequestration will happen and overestimating the immediate effects of it.”

That’s probably because the Pentagon and the defense industry  have been shrieking like banshees for more than a year over the consequences of  some $500 billion in across-the-board sequestration cuts over the next decade.  But within the past few weeks, the tenor of the sequestration debate has become  less apocalyptic, as both the White House Office of Management and Budget and  analysts like Lester have made clear that if it were to happen, the bad stuff  wouldn’t all take place immediately — effectively giving lawmakers a little more  time to work next year.

In the House, Speaker John Boehner (R-Ohio) already is tamping down  expectations for a grand bargain, or even a punt, in the lame-duck session.

“Lame-duck Congresses aren’t known for doing big things and probably  shouldn’t do big things, so I think the best you can hope for is a bridge,” Boehner told CNN on Sunday during a campaign swing through his home state for  Romney. “I would think that would be the best you can hope for and even that is  going to be very difficult to do.”

The question then becomes how Obama and Romney would approach the situation  come January — and how much the two candidates would be willing to budge when it  comes to their plans for military spending.

For his part, Obama has made it clear where he stands on the Pentagon budget.  The president has put forward a plan to reduce defense spending by $487 billion  over 10 years, drawing down the size of the Army and Marine Corps, increasing  fees for military health care and ending several weapons programs.

Since then, several top Democrats — including Senate Armed Services Committee  Chairman Carl Levin (D-Mich.) — have said they’d be open to an additional $100  billion in defense cuts as part of a deal to avert sequestration, bringing the  total to about $587 billion.

And if Obama wins, Democrats stand a good chance of pushing these cuts  through Congress, experts say — since the alternative is sequestration, which  would represent nearly $500 billion in defense cuts over 10 years, on top of the  $487 billion.

“Obama’s in a much stronger negotiating position because the incentive for  sabotaging him on the Republican side will be much lower,” said Mike Breen,  executive director of the left-leaning Truman National Security Project.

Meanwhile, if Romney wins the presidency, the big question is whether  Congress would be able to come to an agreement to push back the onset of  sequestration until after his inauguration. “They might have to find a way to  patch and punt, to allow Gov. Romney to enact his own proposals in 2013,” Eaglen  said. “Presumably, there wouldn’t be a proposal from him until after he’s  inaugurated.”

Of course, even a sequestration punt — or “bridge,” as outside  groups have begun calling it — could prove difficult for Congress, as Democrats  and Republicans would likely be divided on the terms of a deal.

“A Romney administration would prefer some sort of a stopgap measure, get to  the new year and see if there’s a grand bargain available,” said Bill McQuillen,  vice president of public affairs at JDA Frontline, a consulting firm. “The  Democrats would want to stay in session as long as they can and see what they  can ram through.”

Nora Bensahel, a senior fellow at the Center for a New American Security,  agreed.

“If Romney wins, you’re likely to see Republicans push very, very hard to  delay [sequestration],” Bensahel said. “But there is a real wild card: They  can’t do it unless [Obama] signs it. And that gives him tremendous power during  negotiations in the lame duck.”

In the past, Obama has said he would veto any deficit-reduction deal that  doesn’t include revenue increases. But would he be willing to play hardball in  his last month as president? “In that scenario, what it all comes down to is  whether President Obama is willing to use his veto power,” Bensahel said.

Another factor that could shape a potential deal is the margin of victory for  either candidate, and the latest polling data suggest a very close race. “If  Republicans lose the presidential race, they’re going to say it was because  Romney was somewhat of a flip-flopper and wasn’t conservative enough,” said  O’Hanlon — meaning they could only retrench their no-revenues positions. “I  don’t see anybody really crying uncle after Tuesday.”

A narrow Romney victory could embolden Democrats. “If he just squeaks by,  it’s tougher to make a deal,” said Steve Bucci, a senior fellow for defense  issues at the conservative Heritage Foundation. “The Democrats will say that he  didn’t get a mandate so they’re not going to go with his deal.”

It’s unclear what type of mandate Romney would claim, though, regardless of  the margin. His campaign hasn’t outlined how Romney would approach a potential  deal to avert sequestration, beyond reaffirming his commitment to negotiating  with both Republicans and Democrats. And although Romney supports increasing the  size of the defense budget, his campaign hasn’t detailed how he’d pay for  it.

“If I was a betting man, I would say that if Romney wins and has some sort of  minimal mandate … you’ll see them shift the cuts to other parts of the budget,” Bucci said. “But probably not a hundred percent of them.”