The House and Senate reconvened on November 13, 2012, for the start of the post-election “lame duck” session closing the 112th Congress. The Senate then recessed on November 15, 2012,and the House on November 16, 2012, for the Thanksgiving holiday.
During the days Congress was in session, members began discussing the impending sequestration of discretionary funds scheduled for January 2, 2013, but did not take action or put forth proposals. The Budget Control Act of 2011 (BCA) requires the sequestration of discretionary funds in FY13, which means making across-the-board cuts, to achieve a $1.2 trillion reduction in the deficit over a 10-year period.
President Barack Obama met with stakeholder groups the week of November 12, 2012,and then with House and Senate leadership on November 16, 2012, to discuss tax extenders, the debt ceiling and sequestration.
After the meeting at the White House, House Speaker John Boehner (R-OH), House Minority Leader Nancy Pelosi (D-CA), Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) reported that they had engaged in a productive conversation and expected to reach an agreement on sequestration and deficit reduction.
The President reiterated that revenue is key to such an agreement, and House and Senate Republicans indicated that some revenue would need to be included. Both the Democratic and Republican members indicated that spending cuts would be included, with the Republican members focusing on cuts to Medicare and Medicaid.
As a first step in these negotiations, the administration has urged the House to agree that households earning under $250,000 annually should not see an increase in taxes paid, and to pass a Senate bill to keep those tax cuts in place. House Republicans want to extend all tax cuts including those for higher income households and have thus far not supported keeping only the middle class tax cuts in place.
President Obama and more progressive members of Congress are not yet aligned on the basic framework for a deficit reduction deal. When Congress reconvenes the week of November 26, 2012, members are likely to share proposals to replace sequestration. The administration is also expected to release a framework for replacing sequestration with other deficit reduction measures.