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How Republicans and Democrats would stop Sequestration – 3/6/13

What Both Sides Have Offered to Avoid the Sequester

For weeks, President Obama and Congressional leaders have talked — to the press, not to each other — about their respective ideas for replacing the indiscriminate, across-the-board cuts known as sequestration with more rational savings. At Mr. Obama’s invitation, they finally will meet on Friday, the day the automatic cuts take effect.

Their too-late date at the White House does not exactly make each side’s proposed alternatives moot. But neither party was going to accept the other’s ideas for replacing the $85 billion in military and domestic spending cuts: Mr. Obama and Congressional Democrats demand a “balanced approach” of spending cuts and tax increases on some wealthy individuals and corporations, while Republicans refuse to raise revenues. And Republicans would cut some of Mr. Obama’s biggest priorities, like money to carry out programs created by his health care law and financial industry regulation.

For the record, here are the various plans. All figures reflect savings over 10 years.

Senate Democrats and President Obama $110 billion

Mr. Obama has continued to call for a broader $1.5 trillion, 10-year deficit reduction package that would be roughly split between new tax revenues from the wealthy and corporations and reduced spending for the fast-growing entitlement programs — chiefly Medicare and Medicaid, as well as Social Security. But for a short-term fix that would replace the $85 billion sequestration for the final seven months of this fiscal year, the president has endorsed a proposal from the Senate’s Democratic majority that is half revenues and half spending cuts. It would:

• Raise $54 billion in taxes, mostly through what Democrats call “the Buffett Rule,” to require that individuals with adjusted gross incomes above $2 million pay an effective tax rate of 30 percent.

• Raise $1 billion in revenue by ending two corporate tax breaks, one for companies that send jobs overseas and another for certain oil companies.

• Cut $27.5 billion from military spending, significantly less than under sequestration. The reductions would be delayed until American troops leave Afghanistan at the end of 2014 and would be phased in through fiscal year 2022.

• Save $27.5 billion by ending direct payments for farm subsidies.

House Democrats $121 billion
Democrats in the House, who are virtually powerless to pass legislation in a chamber controlled by Republicans, have nonetheless proposed an alternative that is similar to Senate Democrats’ with one major exception:

• Raise $38 billion from repealing three tax breaks for oil and gas companies, instead of cutting the military. (This provision is anathema to oil-state Democrats in the Senate, who are few but influential.)

House Republicans $314.5 billion

Republicans repeatedly say that they twice passed their legislation to avert sequestration, but it died after 2012 with the adjournment of the previous Congress. They have not revived the measure this year. Republican leaders deny that inaction reflects fear that the legislation would not pass again, as the White House has suggested. Their alternative includes provisions that would:

• Cut nearly $90 billion in financing to carry out Mr. Obama’s health care law.

• Save $80 billion by requiring federal employees to contribute more for their pensions.

• Repeal $70 billion for carrying out the 2010 Dodd-Frank law that tightened financial industry regulation, including its independent consumer protection bureau.

• Cut $35 billion in payments to low-income beneficiaries and states for the Supplemental Nutrition Assistance Program, formerly known as food stamps.

• Save $17 billion by ending social services grants to the states.

• Save $7.6 billion by altering the child tax credit.

Senate Republicans $85 billion
A group of Senate Republicans proposed a bill Wednesday night that would cancel the automatic cuts and turn the power to choose the cuts over to the president, who would have until March 15 to identify the same amount of cuts. The legislation, which is likely to come to a vote Thursday, is not expected to pass, as many Republicans (as well as majority-party Democrats) have expressed their opposition.

• No more than half of the cuts could come from defense.

• Congress would have the power to veto the plan before it takes effect.

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