Details of the Democrats’ Ten-Month Sequester-Delay Plan

The Senate Democratic Leadership offered a plan yesterday that would delay the sequester through January 2, 2014 (a ten-month postponement) and would “pay for” this delay of spending reductions with a set of new tax hikes and alternative spending trims. 

(The term “sequester” refers here to a set of automatic, across-the-board spending reductions, in certain programs, scheduled, under current law, to go into effect on March 1, 2013. Congress enacted the sequester as part of the debt ceiling deal of 2011, hoping it would serve as an enforcement mechanism to ensure promised spending reductions took place. This legislative experiment in self-control failed, and now the sequester is slated to take effect March 1st, after having been postponed from January 1st.)

The plan reduces by half the already modest spending trims in the sequester and fills the gap with — surprise — new taxes.

This is a flawed plan that fiscal conservatives should oppose.


The American Family Economic Protection Act (i.e. the Democratic Leadership Sequester Plan) consists of the following provisions:

I. Tax Hikes ($55,000,000,000)

a. Buffett tax – The plan would require upper income taxpayers to pay a 30 percent tax on adjusted gross income less charitable contributions (phased in between $1,000,000 and $2,000,000).

b. Oil companies tax – The plan would include oil from tar sands among the petroleum products that are subject to an 8-cent-a-barrel tax to support the Oil Spill Liability Trust Fund.

c. Offshore tax – The plan would eliminate the tax deduction for costs associated with moving a company’s business operations overseas

II. Spending Cuts ($55,000,000,000)

a. Defense spending – In Fiscal Year 2015 and Fiscal Year 2016, the plan would reduce defense spending by $3,000,000,000, then increase the “cuts” slowly to $5,000,000,000 in FY 2021 for a total of $27,500,000,000 in savings through trims in projected defense spending. Overall defense spending would still rise.

b. Agriculture spending – The plan would end the welfare program known as direct payments to farmers, for a savings of $27,500,000,000 over ten years. 


The proposed sequester delay, estimated to cost taxpayers about $110,000,000,000 over ten years, would trim appropriations, and hike taxes, in equal ten-year amounts. It includes no savings from entitlements. 

Almost all of the new revenue would come from the Buffett tax, a new surtax tax on incomes over a million dollars a year. This is unfair — a classic left-wing tactic to divide citizens against one another — and should be opposed.

The spending trims are only half the amount of what’s in the current-law sequester, which is scheduled to take effect March 1 (after having been postoned in the Fiscal Cliff bill, H.R.8, from January 1).

The Democrats would shift the spending trims from domestic welfare programs to farm programs, while retaining (but reducing) spending trims in defense.

Although I’ve not seen the details, I assume fiscal conservatives could support the Democrats’ proposed spending trims (although not their amount, which is insufficient).


Fiscal conservatives should oppose this plan.  

The sequester would be better than this plan.

Also better than this plan: the House-passed sequester-replacement bill, which contains no tax hikes, but rather redistributes the spending trims from defense to domestic appropriations.

It’s clear from the sequester “substitutes” put forward by House Republicans and Senate Democrats that neither party is serious about cutting spending.

So it’s looking like a very safe bet that the sequester will kick in on March 1st. And that’s fine.

Dean Clancy is FreedomWorks’ Vice President for Public Policy.


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