Bloomberg News

Levin ‘Confident’ Automatic Budget Cuts Will Be Averted

June 12, 2012

U.S. Senator Carl Levin, chairman of the Senate Armed Services Committee, expressed confidence today that automatic cuts that would reduce Pentagon spending by $500 billion over a decade will be averted.

“We’re going to find a way to avoid the sequestration, in my opinion,” the Michigan Democrat told reporters in Washington. He said the economy may be damaged if a compromise is delayed until the lame-duck session after the November election.

As part of an accord, Levin said, his “best guess” is that defense spending can be cut about $10 billion annually without hurting national security, or $100 billion over 10 years.

He said any deal that averts the automatic cuts must include increased revenues, something Republicans so far have been unwilling to agree to in debates over reducing the budget deficit. Most Republicans, except for some Tea Party supporters, “want to avoid sequestration” and could change their minds, Levin said.

“I’m confident we will avoid sequestration,” he said.

A total of $1.2 trillion in automatic, across-the-board cuts to both domestic and national-security programs will take place over 10 years, beginning in January, if Congress doesn’t act to make adjustments this year. The cuts were imposed after talks failed last year on a bipartisan plan to curb the nation’s soaring debt.

‘Confidence-Building’

Levin said he wants to see lawmakers agree on a “confidence-building measure” well before the November election that would demonstrate to consumers and investors a level of bipartisan support for changes in the sequester.

He said such a proposal could include an outline of a debt- reduction plan that has support of lawmakers in both parties, even if the specifics would be worked out and voted upon later. He said it also could come from bipartisan agreement to extend the portion of the expiring 2001 and 2003 tax cuts that affect the middle class, with lawmakers reserving judgment on tax rates for higher-income earners until a debt deal is negotiated.

Levin said all recent debt-reduction plans, including ones agreed to under Presidents Ronald Reagan and George H.W. Bush, included some tax increases. This time can’t be any different, he said.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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