An idea percolating in the U.S. Congress, aimed at helping avoid the "fiscal cliff," would scrap the steep across-the-board spending cuts of $109 billion set to start on January 2, and replace them with more targeted savings of approx. $55 billion. Further measures to reduce the deficit would be considered later in 2013 under this approach.
Such an interim solution could potentially contain some revenue increases, coupled with spending cuts. It also could provide some comfort to corporations, particularly in the defense industry, which are already panicky about the impact of lost government business.
However, it would not resolve a more challenging element of the cliff: what to do about a broad range of income tax breaks enacted in 2001 and 2003 during the George W. Bush administration, valued at some $400 billion, which are scheduled to expire on December 31.
The chances of a comprehensive legislative solution to the cliff problem before January 1 are considered slight, and members of Congress have been looking for some temporary fix to buy time once a new Congress and a new or re-elected president are sworn-in in January.
This effort is still in early planning stages, but if it is approved, it likely would be coupled with a promise by Congress to work on more ambitious deficit-cutting tax and spending measures next year. A future "grand bargain" deal could see as much as $4 trillion in government savings over 10 years.
"It is a fallback with a decent chance of happening," a Senate Democratic aide said of a six-month, $55-billion plan. The aide emphasized that this was being batted around on the staff level and has not been publicly embraced by members of Congress.
A House Republican aide, who said a bipartisan group of senators have been mulling this initiative, was dismissive. "It doesn't make a lot of sense to replace half the cuts in the sequester and not the other half."
Meanwhile, President Obama said during the Oct. 22 presidential debate that the sequestration will not happen. Sequestration is "something that Congress proposed. It will not happen," Obama said.
"I take the president at his word," Former FAA Administrator and Aerospace Industries Association (AIA) President Marion Blakey said. "The discussion going on indicates the momentum is moving toward a resolution." Sequestration could thwart development of the NextGen system and affect FAA's functions.
If Obama wins in November, his statement could make it harder for him to wield the leverage that comes with threatening to let the cuts occur.