Congress Copes with the Court Decision

To give Congress time to reconsider the $11.7 billion reductions in spending mandated by the March sequester (which would, by the recent decision, become unconstitutional), the Supreme Court stayed its order for sixty days. Although some doubted that Congress would do directly what had come about indirectly under the GRH proportional cuts, repeating cuts that had already happened proved not so hard: agencies had adjusted to having less money; barely two months remained in the fiscal year; and on July 17, without even waiting for formal inception of the fallback procedure, the House voted 339 to 72 to affirm the cuts.

The Senate immediately agreed by voice vote, and the president said he would sign.^[24]

The hard part was what to do about FY87, by which time the sequester would be bigger and more painful. The most plausible analysis was made by an administration leader (but Gramm-Rudman skeptic) in April: "Anyone who thinks they'll vote for cuts in September, two months before an election, is smoking dope."

In one way, budgeting has become highly predictable; as soon as Congress does its duty on the deficit, it must face even more insuperable problems. On August 6, almost exactly a month after the vote to reaffirm the March sequester, the OMB FY86 deficit estimate had risen from $203 to $230 billion. The reasons were explicable, albeit after the fact. Corporate profits and personal income had dipped below expectations, thus reducing revenues. Defense outlays had speeded up: either contractors had finally tooled up, or they feared cuts in spending would knock them out. And agricultural price supports had climbed out of sight.^[25] Bad news on FY86 meant FY87 would be more difficult.

Congress next had to decide whether to reinstate some constitutionally permissible form of the automatic sequester procedure. On July 23 Senators Gramm, Rudman, and Hollings introduced an amendment that would have given OMB final say in determining the sequester's procedure, but distrust of OMB was too great to permit its passage. Senator Moynihan claimed that an OMB director would be able to choose whether to hit defense or domestic harder and could distort the actual size of the deficit. Despite the sponsors' assurances that their bill hemmed in OMB so severely it had virtually no discretion left, the measure was postponed to seek other means for tying OMB's hands.^[26]

On July 30 the Senate, by a comfortable 63 to 36 margin, including 21 Democrats, voted to amend its annual debt-ceiling measure so as to reinstate the automatic sequester. The new version still required OMB and CBO to submit their versions to GAO, so that the Senate could see how far OMB deviated; but final authority for determining and implementing the sequester was left to the director of the budget. In addition, the whole thing was rendered null and void if defense did not take its full cuts.^[27]

But the House, more distrustful of the Republican administration, and this time not taken by surprise, would not go along. The lower chamber would agree only to raise the short-term ceiling on federal borrowing by $32.3 billion up to $2.111 trillion, enough, according to the Treasury, to last until September 30. Gramm and company tried to attach a one-year extension of sequestration to this short-run bill. The House stripped off sequestration, 175 to 133, and the Senate did not alter that action.^[28] As they got closer to sequester and it became more

obvious that the hostage game would not work, Senate leaders backed down. The forces of responsibility, after everything, had flinched.