House GOP’s debt-ceiling deal would not postpone sequester cuts

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House Republicans on Friday pitched a plan to raise the debt ceiling for three months, but their proposal does nothing to sooth the fears of $85 billion worth of sequestration cuts that will kick in if Congress and the president fail to reach a deal on debt reduction by March 1.

The GOP plan suggests Republicans think they have greater leverage with negotiating a deal over sequestration as opposed to the debt ceiling.

Lawmakers have to resolve the debate over the nation’s borrowing limit to avoid potentially serious damage to the nation’s credit. The sequester, on the other hand, would entail drastic spending cuts for all government agencies.

Congress reached a deal just hours into the new year to delay the sequester for two months, but that set up a showdown over two major issues — the sequester and debt-ceiling deadlines — for early this year.

By pushing the debt-limit debate to April, as House Republicans proposed on Friday, GOP lawmakers could focus their efforts on a deal to replace the sequester. Failing to reach an agreement on that issue would mean the automatic spending cuts take effect, which would still reduce expenditures.

A deal to head off the spending cuts may be unlikely before the end of February, especially since the worst of the cuts could be pushed off until later in the fiscal year. That could be a pain Republicans and Democrats are both willing to endure.

If the automatic cuts take effect, agencies would lose between 8 percent to 10 percent of their funding for the fiscal year, but the government would not shut down.

Many officials say the cuts would be steeper than 8 percent and 10 percent because they would have to be compressed into seven months instead of 12.

But the government would have until Sept. 30 to make the reductions, leaving time for lawmakers to forge a deal for less-painful cuts.

Agencies in recent weeks have intensified their preparations for sequestration. The Pentagon, for instance, has imposed a freeze on hiring civilians and slashed operating costs on military bases as a precaution.

(For more information on the Republican proposal, read the Post’s coverage from Rosalind S. Helderman.)

For more federal news, visit The Federal Eye, The Fed Page,and Post Politics.

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Josh Hicks · January 18, 2013