January 23, 2015

President Obama did not directly address sequestration in his January 20 State of the Union address, but his February 2 budget proposal is expected to include a fix.

The administration’s FY 2016 budget proposal will be unveiled in less than two weeks.

What’s unclear is how the President might pay for budget relief. It could be through a combination of alternative spending cuts, closing corporate tax loopholes, and increasing the capital gains tax – all proposals laid out in his annual address.

Such a plan may collide with a fiscally-wary Republican-controlled Congress, but it could serve as an important starting point for negotiations.

Outgoing Secretary of Defense Chuck Hagel added urgency to repealing sequestration: “The progress we have made will quickly evaporate if sequestration returns in 2016. We need long-term budget predictability and we need the flexibility to prioritize and make the difficult decisions…we will not be able, this institution, to fulfill the commitments of the president’s defense strategies with the kind of continued abrupt, steep, large cuts that sequestration will demand.”

Legislators on both sides of the aisle agree that sequestration’s across-the-board cuts must be avoided. Congress succeeded in passing a bipartisan proposal to temporarily avoid sequestration in FY 2014 and 2015. Agreement on a way to fund a new fix remains elusive.