President and Congress Discuss Desire to Avoid Sequester

Earlier this week, President Obama discussed his desire for Congress to pass a smaller package of spending cuts and tax increases that would delay the sequester for a few more months until Congress can find a way to replace these cuts with a more balanced solution. However, the president did not provide any detailed information of what spending cuts and tax increases he supports. Meanwhile, Democrats and Republicans in Congress floated some specifics about their plans to avert these cuts. Senate Democratic Majority Leader Harry Reid (D-Nev.) noted that he would like to offset the cuts by closing tax loopholes for the oil and gas industries, companies that move jobs overseas, and corporate jets. House Democrats put forth a legislative proposal to increase taxes on oil and gas companies, a minimum tax on millionaires and billionaires, and lower farm subsidies. Republicans on the House and Senate Armed Services committees unveiled their own proposal based on a 10 percent reduction in the federal workforce through attrition. Last Congress, House Republicans passed a bill that would have replaced the defense cuts in the sequester with cuts to the president's health care law and food stamp program, among other things. At this point, neither side appears close to reaching a deal to avert the sequester. AGC recently updated its sequestration report, detailing the possible impacts of sequestration on the federal construction market. According to AGC's analysis, sequestration could cut approximately $4 billion federal construction investments in FY 2013 alone. As a result of the two month delay of sequestration enacted by the American Taxpayer Relief Act (the "Fiscal Cliff Deal"), $24 billion in overall federal budget cuts in FY 2013 were averted, leading to the change in initial AGC estimates of over $6 billion in potential cuts to federal construction spending. AGC held a free webinar for members on the possible impacts of the sequestration cuts, including federal construction contracting agencies' possible changes in their contracting behavior. AGC continues to strongly urge Congress and President Obama to enact sensible debt reduction reforms and avert these indiscriminate sequestration cuts. For more information, please contact Jimmy Christianson at (703) 837-5325 or christiansonj@agc.org.