Federal Relations

August 21, 2012

Obama Calls for Compromise on Sequester

President Obama said Monday that he thinks both parties can compromise and avert the across-the-board spending cuts under sequestration that could take sizable cuts out of both defense and non-defense discretionary spending.  In an interview with The Virginian-Pilot’s military editor that focused on the sequester — the 10-year, $500 billion cut to both defense and non-defense discretionary spending set to hit in January 2013 — Obama said that both Democrats and Republicans have to give to reach a deal. 

Despite the President’s call for compromise on sequestration, the two parties remain deadlocked on a solution to avert the cuts, which both parties consider bad policy.  Obama and Democrats have said that Republicans are protecting tax cuts for the wealthy over the defense cuts, while Republicans say that Democrats are holding the military hostage to force tax increases.

No action on this will be taken until after the November elections.  And, based on past efforts to reduce the national debt, it is still unclear whether or not either party is willing to compromise to reach a middle ground or “grand bargain” on this effort.  Time will tell.  In the meantime, we are advising the UW community to plan for a potential of 8.4% (or more) cuts to federal grants and contracts.