StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Yes, The CR Can Be Used To Stop The Sequester

10 Aug 2012
Posted by Stan Collender

The question I've been getting most often since House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) sort of announced an agreement on a six-month continuing resolution for fiscal 2013 is whether that CR can be used to stop the sequester from occurring on January 2.

The answer is yes, and it's happened before.

First, some quick background for anyone who isn't a complete budget process geek and doesn't repeat this hourly.

1. The sequester is the across-the-board spending cut that was triggered when the anything-but-super committee failed to come up with a deficit reduction plan last November.

2. The sequester will occur on January 2, 2013, unless Congress and the president legislatively agree to a change in the Budget Control Act, the law that created the anything-but-super committee and the fall back automatic spending cut if it failed.

3. Sequesters are not new. They were first used in the Gramm-Rudman-Hollings law (the "Balanced Budget and Emergency Deficit Control Act") enacted in 1985. GRH was subsequently revised in 1987 (the "Balanced Budget and Emergency Deficit Control Reaffirmation Act").

In the current hyperpartisan political environment, it's important not to minimize the difficulty of enacting legislation that has anything to do with federal spending, taxing, deficits, or the debt. But in general, all it would take to cancel, delay, or modify the sequester as everyone from Fed Chairman Ben Bernanke to the CEOs of many of the largest Pentagon contractors are suggesting/demanding/ praying for is to amend the Budget Control Act.

That means that legislation has to be passed by the House and Senate and signed by the president. It can't be done by presidential order or by a resolution adopted by the House or Senate or the House and Senate.

And that means that the continuing resolution -- the appropriation law that if enacted will provide funding for all federal departments and agencies for up to six months -- definitely can be used as the legislative vehicle to do away with the 2013 sequester.

This is not speculation; it's been done before. In 1991, a continuing resolution for 1991 (P.L. 101-403) that kept the government funded for just 20 days -- from October 1 to October 20 -- also stopped the sequester from occurring during that time.

In language that could easily (and almost eerily) be re-used today with minor changes, the report accompanying that CR stated;

Currently, the economy is weakening. The country is sustaining an economic shock made worse by oil price increases. The cost of Operation Desert Shield in Saudi Arabia is putting additional pressure on the deficit. The Congress and the Administration are working to address these problems, but the actions needed to work out this situation have not yet been implemented.

The Balanced Budget and Emergency Deficit Control Act recognizes that when the economy is weak, special circumstances regarding sequestration are required. Provisions included in that Act establish a procedure for the suspension of sequestration in these circumstances. Clearly, the economy has been weakening in the last several quarters. Examples indicative of this weakness are rising unemployment, fewer construction starts, a drop in retail sales, declines in industrial production, and increases in the consumer price index. Reports in the press indicate some regions of the country are already in recession.

The effect of the pending sequestration on domestic programs is massive. It would result in needless impact on a weak economy, if it were implemented, not to mention the impact on the Department of Defense during Operation Desert Shield.

Section 113 of the 1991 CR was what suspended the sequester:

SEC 113. (a) Any order on sequestration for fiscal year 1991 issued before, on, or after the date of enactment of this joint resolution pursuant to section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 is suspended and no action shall be taken to implement any such order.

When they made their kind of/sorta announcement, neither Boehner nor Reid said anything about using the fiscal 2013 CR to suspend the sequester and Boehner specifically mentioned that it would be "clean," that is, no provisions other than those needed for temporary funding.

But after the White House complies with the Sequestration Transparency Act in early September and releases the details of what would be cut if the sequester goes into effect in January, the political pressure to stop the sequester from happening will intensify.

Given that the CR may be the only bill that is enacted...or enactable...before the election, that opposing the CR could get you blamed for what would be an unpopular government shutdown a month the election and in light of the precedent set in 1991, it's safe to assume that history will repeat itself and someone will try to use this year's continuing resolution to stop the sequester from happening.

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