Note: Now that Senate Democrats have released their own plan to stop the sequester, we're updating and republishing this old post.
The trouble is, few people in Washington actually want these cuts. They were designed to be sweeping and crude — affecting everything except Social Security, Medicaid, a few anti-poverty programs, and the ongoing wars. Republicans don't like the fact that the Pentagon's budget gets slashed 7.3 percent this year. Democrats don't like the sweeping, across-the-board hacks to government agencies.
As such, many members of Congress would prefer to replace the sequester with something else. Here are the four of the ideas out there.
1) The new plan from Senate Democrats: Replace one year of the sequester with defense cuts, domestic cuts and tax hikes.
Senate Democrats are proposing to cancel the $85.3 billion in sequester spending cuts for 2013 and replace them with a mix of spending cuts and tax hikes.
How would they pay for this? For one, this plan would include about $27.5 billion in spending cuts. But rather than fall all at once, these would be spread out over time, starting at $3 billion per year in 2015 and rising to $5 billion per year by 2021. (Note, however, that these would presumably come on top of the defense cuts in the rest of the sequester that will begin in 2014.)
The plan also saves $27.5 billion by cutting direct payments to farmers, and raises $55 billion by hiking taxes, from implementing the Buffett Rule for incomes over $1 million to ending tax deductions for oil companies.
2) The old House GOP plan: Eliminate other government programs to replace the sequester cuts.
Back in the last Congress, Republicans in the House narrowly approved the Spending Reduction Act of 2012, which would have replaced the defense cuts in the sequester with cuts to other parts of the government, particularly anti-poverty programs.
Here's how it would work. The $55 billion in sequester defense cuts scheduled for 2013 would disappear. Instead, the GOP bill would have trimmed spending from elsewhere in the budget — shrinking the expanded food-stamp program that was expanded as part of the stimulus, for instance.
The bill also would make further cuts to various programs over the next 10 years. For instance, it would eliminate the $11.4 billion public-health fund in the Affordable Care Act as well as cut the Social Services Block Grant program (which funds, among other things, meals on wheels for seniors.) All told, the Congressional Budget Office estimated that the House bill would have cut the deficit by about $1.4 trillion over the next 10 years, compared with $1.2 trillion from the sequester.
The hitch? This bill was barely approved in 2012 and it doesn't look like it can win a vote in the new Congress. The GOP leadership reportedly conceded that they probably can't pass this bill again. Also, the White House flatly opposes this plan, saying that it would "hurt middle-class families."
3) The House Democratic plan: Fend off the sequester for one year by raising taxes and cutting farm subsidies.
By contrast, House Democrats have put forward a plan to fend off the $85 billion in sequester cuts for 2013. The spending cuts for subsequent years would be allowed to stand.
But the bill wouldn't affect the deficit at all. Democrats would pay for that $85 billion through a mix of different cuts and taxes: Cut a farm-subsidy program that offers direct payments to farmers. Raise premiums on the National Flood Insurance Program. Implement a minimum tax for income over $1 million. And eliminate various tax deductions that benefit oil and gas companies.
Most of these taxes and spending cuts would be spread out over 10 years. So Van Hollen's bill would essentially give the budget — and the U.S. economy — some breathing room in 2013 and postpone deficit reduction until later on.
The hitch? Republicans in the House aren't fans of this idea. Just this week, Van Hollen's bill was rejected by the House Rules Committee.
4) President Obama's plan to fend off the sequester for a short while with a smaller package of cuts and tax reforms.
President Obama hasn't really offered specifics on how he'd deal with the sequester. But for the record, here's what he said Tuesday:
Obama did not outline a specific proposal, and he said he still favored a broad deal of spending cuts and tax changes — which would eliminate deductions and loopholes that benefit the wealthy and certain industries — to replace the sequester.“If Congress can’t act immediately on a bigger package, if they can’t get a bigger package done by the time the sequester is scheduled to go into effect,” Obama said in the White House briefing room, “then I believe that they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months.”
That sounds like a smaller, more modest version of the Van Hollen plan. But without specifics, it's hard to say.