Domestic programs are spared further automatic budget cuts, a little-known wrinkle that could give Democrats some advantage in upcoming negotiations over repealing sequestration — or at least easing its effects.
That reality is beginning to dawn in the federal government, which allowed this year's $72 billion round of cuts to take effect. Officials have a few months to try to replace an even deeper round of cuts expected to take effect in January.
The situation is a product of the fallout of a budget law enacted two years ago that set up a deficit "supercommittee" with orders to come up with $1.2 trillion in deficit cuts over a decade. The law included the threat of the automatic cuts as a backstop intended to force a deal.
Sequestration was designed to be so painful that lawmakers would feel they had no choice but to act to prevent the automatic cuts. Instead, Congress managed to find only $24 billion in deficit cuts, leaving in place $72 billion in automatic spending reductions for 2013. About $17 billion of the automatic cuts came out of benefit programs — mostly from payments to Medicare providers. The other $55 billion was from the $1.043 trillion budget that Congress put together for day-to-day government operations. More than half of that goes to the Pentagon.
Democrats and President Barack Obama were the most anxious to reverse sequestration. Sensing that, GOP leaders were content to allow it to take effect.
The two sides have settled into a budget stalemate that shows no signs of easing — though talks between the White House and a handful of Senate Republicans have intensified in recent weeks.
Sen. John McCain, a leading Republican voice on national security issues, said he continues to work toward a budget deal that would end sequestration. But he's clearly frustrated over the lack of progress and says he couldn't predict success.
"The talks continue and continue and continue," the Arizona Republican said.
Some lawmakers and staff aides say the new, deeper reductions in the Pentagon's budget to could be the jolt that prompts lawmakers to step back from the automatic cuts.
"This is the primary motivator for undoing sequestration," said Jennifer Hing, spokeswoman for House Appropriations Committee Chairman Harold Rogers, R-Ky. "Defense will take an enormous hit and it will not be something they can absorb overnight."
The cuts are indeed daunting to the Pentagon, which has traditionally enjoyed sweeping bipartisan support from Congress and has seen its budget requests go mostly unchallenged during more than a decade of war in Iraq and Afghanistan.
Come January, however, the Pentagon faces a cut of $54 billion from current spending if Congress fails to reverse the automatic cuts, according to calculations by Capitol Hill budget aides. The base budget must be trimmed to $498 billion, with cuts of about 4 percent hitting already reduced spending on defense, nuclear weapons and military construction. The roughly $78 billion budget for overseas military operations is exempt from sequestration.
Senior military officials have repeatedly warned about the devastating effects of the automatic cuts. Yet the Pentagon also appears resigned to the possibility that it will get no relief from sequestration and that defense hawks in Congress — outnumbered by GOP deficit hawks — will be unable to save the military budget.
The cuts would disproportionately hit modernization of aircraft, ships and weapons; operations and maintenance; training of the all-volunteer force; and health care. This is due in part because Obama exempted military personnel from the automatic cuts as well as additional money directed toward the war in Afghanistan.
Gen. Ray Odierno, the Army chief of staff, strongly suggested that the sequester could be deadly for U.S. military forces.
"What keeps me up at night is if I'm asked to deploy 20,000 soldiers somewhere, I'm not sure I can guarantee you that they're trained to the level that I think they should be over the next two or three years because of the way sequestration is being enacted," Odierno said in remarks Monday at the American Enterprise Institute. "We'll still send soldiers ... but they will not have been able to train collectively the way we would like. ... That means operations would take longer but, most importantly, it probably equals more casualties."
Congress has shown little inclination to undo the sequester, and many lawmakers seem content with cuts in defense spending as the United States cleans up after the war in Iraq and winds down another in Afghanistan.
The warnings from the military have largely gone unheeded.
"Frankly, I'm surprised because really bad things are happening to the military and it's doesn't seem to be having an effect here," McCain said.