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On February 15, Senate Majority Leader Harry Reid (D-NV) unveiled the Senate Democrats’ alternative to sequestration, The American Family Economic Protection Act. The $110 billion package would replace the FY 2013 sequesters with a combination of new revenue and spending cuts.
Under the Senate Democrats’ plan, new revenue would come from the “Buffett Rule,” a required minimum 30 percent tax phased in on income between $1 million and $2 million ($54 billion in savings), eliminating corporate tax deductions related to moving jobs overseas (less than $1 billion in savings), and from allowing certain types of oil to be taxed ($2 billion in savings).
Spending reductions would be divided equally between defense cuts – $27.5 billion spread out over 7 years – and savings derived from cutting farm subsidies and extending certain expired Farm Bill programs ($27.5 billion).
The Senate Democrats plan is unlikely to become law as proposed, and will face opposition from Senate and House Republicans, who have opposed raising tax rates as a means of gaining additional revenue.
Absent congressional action, $85 billion in automatic, across-the-board spending cuts will go into effect on March 1. It is possible that even if the sequesters go through on March 1, Congress will seek to unwind them retroactively through the FY 2013 appropriations process, which has not yet been completed. However, lawmakers remain sharply divided on how sequestration should be replaced, so it is unclear whether they could come to an agreement even with additional negotiating time.
National Skills Coalition has weighed in with policymakers on several occasions, urging them to avoid sequestration and instead to adopt a balanced approach to deficit reduction that does not include further cuts to discretionary programs.
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