The Tiny Little Budget Provision That Could Destroy the Sequester

The se­quest­ra­tion spend­ing caps, once thought to be so odi­ous that Con­gress would nev­er ac­tu­ally al­low them to take ef­fect, are set to hit again in Janu­ary. And des­pite all of the in­tern­al fight­ing among Re­pub­lic­ans over wheth­er to bust the lim­its on de­fense spend­ing, the budgets that the House and Sen­ate will pass this week will do noth­ing to stop it.

The much-lauded bi­par­tis­an 2013 Ry­an-Mur­ray agree­ment to al­ter some of the caps lasts for just two years and will soon ex­pire, leav­ing Con­gress with the head­ache of how to handle the across-the-board cuts later this year.

But giv­en the power de­fense hawks have shown in both cham­bers over the last week of budget ne­go­ti­ations, there are clear signs that even the Re­pub­lic­an-con­trolled Con­gress doesn’t want to face an­oth­er round of se­quest­ra­tion.

And Sen­ate Budget Com­mit­tee Chair­man Mi­chael En­zi has left the door open to a deal to do just that.

(RE­LATED: Mitch Mc­Con­nell’s Math Prob­lem)

En­zi and his fel­low com­mit­tee mem­bers in­ser­ted a small pro­vi­sion in­to the Sen­ate Re­pub­lic­an budget that was re­leased last week that was de­signed to give oth­er com­mit­tees the flex­ib­il­ity to do a Ry­an-Mur­ray: Part Two.

The “De­fi­cit-Neut­ral Re­serve Fund to Strengthen Amer­ica’s Pri­or­it­ies” looks in­noc­u­ous enough. It’s vaguely worded and bur­ied in the Sen­ate’s budget along­side sev­er­al oth­er re­serve funds aimed at en­ergy, tax re­form, health care, and oth­er le­gis­lat­ive is­sues. But the el­ev­en-line pro­vi­sion could set the stage for a deal to elim­in­ate—or at least al­le­vi­ate—the se­quest­ra­tion caps for both de­fense and non-de­fense fund­ing set to go in­to ef­fect early next year.

That last bit is key. If Re­pub­lic­ans hope to spend ad­di­tion­al money on de­fense over the next year, they’ll need to pass a law through both the House and Sen­ate that al­ters the Budget Con­trol Act. Al­ter­ing the de­fense spend­ing caps is un­likely to be enough to earn the sup­port of six Demo­crats in the Sen­ate, much less Pres­id­ent Obama’s sig­na­ture. That means that con­gres­sion­al ne­go­ti­at­ors will have to al­ter the caps for both de­fense and non-de­fense pro­grams.

In the Sen­ate, de­fense hawks ap­pear to be open to the idea. And the fact that En­zi, un­like House coun­ter­part Tom Price, has left the re­serve fund open to de­fense and non-de­fense spend­ing is a sign that a deal—however dif­fi­cult—is pos­sible.

(RE­LATED: House GOP Wants to Give Pentagon a Boost)

Re­pub­lic­an Sen. Kelly Ayotte of New Hamp­shire, who has been a vo­cal sup­port­er of rais­ing the de­fense caps and op­posed BCA when it passed in 2011, called the fund “an im­port­ant first step” in over­turn­ing the se­quester caps in a press con­fer­ence with GOP lead­er­ship Tues­day—”if the Demo­crats want to work with us on a bi­par­tis­an res­ol­u­tion,” she em­phas­ized.

Ayotte is re­portedly part of a work­ing group that in­cludes Sens. Lind­sey Gra­ham, Tim Kaine, An­gus King, and Ro­ger Wick­er that has been dis­cuss­ing a po­ten­tial solu­tion over the last sev­er­al weeks. Gra­ham told The Hill that he would be will­ing to close cer­tain tax loop­holes in ex­change for changes to en­ti­tle­ments in an am­bi­tious agree­ment he termed “a mini Simpson-Bowles”. So far, the group is still talk­ing.

And al­though Sen. Patty Mur­ray traded in her budget gavel for one on the Health, Edu­ca­tion, Labor, and Pen­sions Com­mit­tee this year, she’s already push­ing for an­oth­er deal to end or al­ter se­quest­ra­tion.

Mur­ray is push­ing le­gis­la­tion that raises the caps by $74 bil­lion in each of the fisc­al years 2016 and 2017. The Wash­ing­ton state Demo­crat plans to in­tro­duce the bill as an amend­ment to the Sen­ate budget later this week and will call on Re­pub­lic­an col­leagues to deal with the is­sue now, rather than wait­ing “un­til we get closer to an­oth­er crisis,” an aide said Tues­day.

(RE­LATED: Yet Again, House Re­pub­lic­ans Are Stuck)

The Mur­ray amend­ment is un­likely to pass through a Re­pub­lic­an-con­trolled Sen­ate, giv­en that the off­sets come from clos­ing as-yet-uniden­ti­fied tax loop­holes on busi­nesses and the wealthy, but the meas­ure could be an early test of sup­port for such a deal.

And Mur­ray has said that she’s open to oth­er sug­ges­tions on how to pay for it. “If my Re­pub­lic­an col­leagues have any oth­er ideas for how we get this done, my door is open, and I am ready to get to work,” Mur­ray said last week.

The House will be an­oth­er is­sue. Lead­er­ship in the lower cham­ber is fight­ing fires between de­fense hawks who want to raise the caps, and fisc­al con­ser­vat­ives who hope to main­tain them, with a plan to vote Wed­nes­day on a blue­print that boosts de­fense spend­ing bey­ond the Budget Com­mit­tee’s ori­gin­al draft. And this is only in a sym­bol­ic budget doc­u­ment.

The battle lines be­ing drawn in the House now will likely only deep­en as Sen­ate ne­go­ti­at­ors be­gin to dis­cuss a pos­sible se­quest­ra­tion deal. But if de­fense hawks are vic­tori­ous in the House’s budget fight Thursday, they’ll gain im­port­ant lever­age for the se­quest­ra­tion fight down the road.