Sequestration Cuts Just Days Away

When Congress returns from its weeklong recess for the Presidents Day holiday, there will be only a few days left to decide what to do about the governmentwide sequestration cuts scheduled for March 1: come up with a compromise to block them, delay them, or let them kick in. Under the sequestration agreed to in July 2011, federal budget cuts would total $1.2 trillion over 10 years, with the ax falling equally on defense and most nondefense spending. The draconian cuts, agreed to in a deal to increase the federal debt ceiling limit, were intended to force lawmakers and the White House to reach an accord that would begin to reduce the deficit. Medicare is slated for a cut up to a maximum of 2 percent, including payment reductions for clinical laboratories, physicians, and hospitals. If that takes effect, the program would be cut by $11 billion in 2013 or $100 billion over 10 years, according to the Office of Management and Budget. While beneficiaries are spared, they could feel the effects if the cuts lead physicians to stop treating Medicare patients, notes the College of American Pathologists. At press time, the outlook for avoiding the sequestration deadline is anyone’s guess, with some lawmakers saying a deal could be reached prior to March 1 and others saying it is not likely. A Democratic proposal would block sequestration through Dec. 31 and pay for it with a mix of targeted spending cuts and new tax revenue by closing loopholes in the tax code. Republicans have countered with a proposal to block defense spending cuts and institute reforms to entitlement programs. But the president in his State of the Union address objected to increasing cuts to these programs without new revenue. The GOP, however, having given in to a tax hike on the wealthiest Americans starting Jan. 1, have said they are in no mood to agree to more taxes and have insisted that entitlements must be pruned.