Since its creation, the Washington, DC lobbying corp has given the 12-member Joint Select Committee on Deficit Reduction (Super Committee) only about a 25% chance of success at reaching a consensus on a $1.2 trillion deficit reduction package. Unfortunately given the past two weeks of vacillation and the November 23 deadline fast approaching, it turns out they may be right.
Amidst dire warnings about the impacts of deep cuts in military spending from Pentagon officials and leading economists warnings of dire consequences of lost U.S. confidence in global markets, congressional members of the Super Committee could not reach consensus on multiple proposals which surfaced during the week of November 7-11. In fact, the plan receiving the most consensus among members only includes cuts of about $400 – $600 billion.
Super Decisions or Else!
If the Super Committee cannot reach a consensus on $1.2 trillion in savings, budget sequestration will be triggered to fill any remaining gaps of the total required savings. Typically under budget sequestration, funds equal to the amount of the gap between the legislated budget cap established in the Budget Resolution and the amount actually appropriated by Congress is sequestered by the Treasury Department. Once those savings are captured, across-the-board cuts are directed in all federal agencies.
However, under the Budget Control Act of 2011, across-the-board cuts will be equally split between security and non-security programs. That means cuts to the Department of Defense budget will be as high as $600 billion, half of the total $1.2 trillion goal, an amount that Secretary of Defense Leon Panetta has described as “inviting aggression,” in our volatile world.
The U.S. House is scheduled to vote on a Balanced Budget Amendment the week of November 14. This legislation is a result of the agreement reached earlier this year to increase the U.S. debt ceiling. Currently the chief sponsor of the amendment, Bob Goodlatte (R-VA), has amassed 242 co-sponsors, however it falls short of the two-thirds votes (287) needed to amend the U.S. constitution.
Truth and Consequences
If the Super Committee fails to reach a consensus on cutting $1.2 trillion of governmental spending, the balance of what they don’t cut (currently about $600 BILLION), will be divided among all other departments. Half ($300 BILLION) will come directly from defense (military) budgets and the other half will be divided among the remaining 14 executive branch departments. This will impact not only defense contractors, but all the small businesses that supply federal government agencies with goods and services.
To put this in perspective, if across-the-board spending reductions were directed to be achieved from each of the non-military departments, up to $21 billion in savings over 10 years would be requested from each. Departments such as Agriculture (USDA) could see their discretionary budget (FY 2012 = $24 billion) reduced by nearly nine percent. (USDA total outlays in FY 2012 are $145 billion; $121 mandatory spending, $24 billion discretionary spending.)
Ask Youself…
- Are any of the programs that our industry depends on slated to be cut?
- How can we communicate critical issues to policymakers?
- Are there changes that our industry will benefit from? i.e. more information technology use and less paper documentation.
- How can we stay on top of these issues and how they impact us?
Cansler Consulting is an experienced lobbying firm in budgeting, agriculture, rural healthcare, and energy policies and through our Congressional relationships we can help you influence the policy makers on Capitol Hill. You can contact us at [email protected] or at (202) 220-3150.
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