A rare New Year’s Day legislative session in Washington produced a response to the Fiscal Cliff — one that led to House passage late Tuesday of a Senate sponsored measure that delays for two months sharp cuts in defense and non-defense spending while extending Bush era tax cuts to the middle and lower classes.
The leaders of the nation’s civil space program, NASA and NOAA, were among those federal agencies otherwise facing 8.2 percent reductions in their budgets, also known as the sequester, starting Wednesday.
In all, sequestration threatened twin $500 billion reductions in defense and non defense programs across the federal government as a deficit reduction strategy. The cuts, some experts warned, would disrupt future human and commercial spacecraft development initiatives as well as weather satellite operations and lead to contractor job cuts. At NASA, 20,500 contractor positions were at risk; at NOAA, 2,500.
The Aerospace Industries Association, which represents the nation’s major civil as well as defense aerospace contractors, was among those who warned the abrupt spending cuts and an estimated 2.1 million in job losses to follow across all employment sectors in the U. S. would throw an already fragile U. S. economy back into recession.
The compromise hammered out in the final days of 2012 by Vice President Joe Biden and U.S. Sen. Mitch McConnell, R-Ky, the Senate Minority Leader, passed the Senate early Tuesday, 89 to 8.
The Republican-led House balked at passage until late Tuesday, many of the legislators opposed to the absence of provisions to cut spending, while permitting taxes to rise for the wealthiest Americans.
But just after 11 p.m., EST, the House passed the measure 257 to 167, and it was sent to President Obama for his signature.
“The law is just one step in a broader effort to strengthen our economy. We continue to chip away at the problem step by step,” said Obama as he prepared to sign the measure.
“We can eliminate, but we can’t cut our way to prosperity,” he cautioned. “We can’t keep cutting things like basic research and new technology and still expect to succeed in a 21st Century economy.”
The AIA issued a plea to lawmakers on Saturday to avoid a deal that would extend tax cuts without addressing the pending sequester.
“We understand that sensible budget cuts across government will have to be a part of long-term deficit reduction, but sequestration is simply the wrong way to do it,” said Marion Blakey, The AIA president and CEO. “This mindless meat axe will cause immense disruption and harm our economy and national security which has already absorbed $487 billion in cuts without reducing the deficit in any meaningful way.”
Any euphoria over the New Year’s agreement promises to be temporary.
The world’s markets will react. A new Congress, elected in November, will go into session on Thursday. The lawmakers will face anew decisions on raising the nation’s debt ceiling, tax policy, the delayed sequester and deliberations on a budget for 2014.