Sequestration is now very likely. Your Intercepts correspondent was away at a somewhat secure, somewhat undisclosed location for a few days celebrating Christmas. Upon his return, the likelihood that massive defense cuts will be triggered this week seemed to grow exponentially.
President Obama met with House and Senate leaders in the Oval Office on Friday afternoon, seeming to read them the riot act about getting enough of a deal done to avoid the so-called fiscal cliff. But, as we noted in a piece posted Friday evening, none of the players involved in crafting the eleventh-hour plan uttered the word sequestration nor the phrase defense cuts.
Obama was the only player who dangled a stem of hope for proponents of the military and domestic programs that would be subjected to twin $500 billion cuts over the next decade if a broader fiscal deal isn’t passed by Monday (Dec. 31).
If either the Senate Republican or Democratic caucus — or both — balk at the Reid-McConnell package, Obama said he has “asked” Reid to bring to a vote a separate measure that would extend middle class tax cuts, ensuring unemployment benefits are not cut off, and that lays the foundation for future fiscal reform.
I wrote this last evening of Obama’s comment: “That last part could well mean the bill would delay some — or all — of the pending cuts to projected federal spending.”
But this morning, the Washington Post reported a chilling reality for the U.S. defense sector: During the White House meeting, House Speaker John Boehner, R-Ohio, “insisted that House Republicans would refuse to delay or cancel the cuts, known as ‘sequestration,’ without fresh spending cuts to replace them. Democrats would find that proposition hard to accept.”
In the months since the sequestration threat was created, the U.S. defense sector spent millions helping their top allies in Congress, like House Armed Services Committee Chairman Buck McKeon, R-Calif., HASC Ranking Member Adam Smith, D-Wash., and a long list of others win re-election. Industry groups also spent considerable time, effort and monies holding anti-sequestration rallies in areas of the country that have a big defense-sector presence.
In short, the sector essentially spent its time playing preacher to its friendly choir. Some of us defense-sector observers found this approach a bit odd, but were repeatedly told by sector officials and congressional allies “it’s working.”
Unless something changes between Saturday morning and Sunday afternoon, when Reid and McConnell are slated to present their last-minute legislation to their caucuses, it is increasingly clear the Defense Department and industry should have placed more effort on a group they once could count on: conservative House Republicans. This group likely is just as pro-military as past House GOP caucuses, but with a key difference, as one analyst put it to me last week: “They came to burn down the castle.”
That castle is what they perceive as Washington’s addiction to spending taxpayers’ money. And they are so dedicated to torching the joint that they are willing to allow the pending defense sequestration cuts to go through.
But it appears there are a few potential white knights out there who might be able to wrangle at least a sequestration delay. But this correspondent is betting Pentagon and industry officials didn’t expect one to be a senator who has been one of the biggest thorns in their collective side for many years: John McCain, R-Ariz., the upper chamber’s outgoing Armed Services Committee ranking member.
McCain told the Post he doesn’t “see how you could do a deal without sequestration being part of it [because] too many of us care too much about it.” Can McCain get to McConnell and convince him to do something on sequester? And, if he does, will his mates in the House vote down the Reid-McConnell bill, burn down the castle, set off big defense cuts, and send the nation over the dreaded fiscal cliff?