It's beginning to look a lot like sequestration

Just a week ago, I told a group of executives that my sequestration prediction was that Congress and the president would pass some sort of extension during the lame duck session.

It was inconceivable that the brinkmanship would get so bad as to let it happen. I said that, six months from now, sequestration would be off the table. Just a bad memory.

But now I’m starting to doubt myself.

The first seed of my doubt was planted with the White House decision to tell contractors that the threat of sequestration isn’t enough to trigger the WARN Act and the issuing of layoff notices to potentially hundreds of thousands of workers.

The second seed came as I’ve heard more people talking about the mechanics of sequestration cuts, and that the cuts won’t hit on day one. The government will not shut down, and programs will not be cancelled en mass if the Jan. 3 deadline isn’t met; in fact, it could be weeks to several months before cuts are implemented.

It’s not like getting a budget or continuing resolution passed, where the government sends people home if it doesn’t approve the budget or CR.

The pain of sequestration will come more slowly.

My doubts were solidified this morning, when I read the Washington Post story about President Obama threatening to veto any extension of the Bush tax cuts if taxes do not go up for those making more than $250,000 a year.

The article by Post staff writer Lori Montgomery explains that after the election, Obama will be freed from “the political and economic constraints that have tied his hands in the past.” He will be ready to “play hardball with Republicans, who have so far successfully resisted a deal to tame the debt that includes higher taxes.”

It’s not inconceivable that an extension of sequestration gets tangled up with getting the tax cuts extended in some form.

Of course, the markets and confidence in the economy will react negatively, the closer we get to the sequestration deadline without a resolution. That will put a lot of pressure on both parties to strike a deal.