OK. No one cares about the sequester

No one cares about the sequester.  Or maybe, no one knows about it.  Or maybe everyone is just tired of Congress.

Here is Mike Luckovich today with a history of our recent financial crises.

Gee.  I don't know why you think all this is my fault.

Gee. I don’t know why you think all this is my fault.

No wonder the general public doesn’t care right now.  And they probably won’t care until cuts start to hurt them.  Let’s face it:  both sides are using those old techniques of  putting forward the arguments that make the best case for their point of view.  The Republicans are right in that it won’t hurt for a little while – maybe a month or so.  And the Democrats are right that this whole exercise is unnecessary and, in the long run not helpful to recovery.

Thomas Mann and Norman Ornstein who wrote the excellent book, “It’s Even Worse Than It Looks”, have an excellent piece in today’s Washington Post titled “Five myths about the sequester”.

1. Blame Obama — the sequester was his White House’s idea.

Identifying the origins of the sequester has become a major Washington fight. Bob Woodward weighed in recently with a Washington Post op-ed making the case that the idea began in the White House. He’s right in a narrow sense, mainly because he focuses on the middle of the 2011 negotiations between Obama and Republican lawmakers. If you look before and after, a different picture emerges.

In our view, what happened is quite straightforward: In 2011, House Republican leaders used their new majority to force their priorities on the Democratically controlled Senate and the president by holding the debt limit hostage to demands for deep and immediate spending cuts. After negotiations between Obama and House Speaker John A. Boehner failed (Eric Cantor recently took credit for scuttling a deal), the parties at the eleventh hour settled on a two-part solution: immediate discretionary spending caps that would result in cuts of almost $1 trillion over 10 years; and the creation of a “supercommittee” tasked with reducing the 2012-2021 deficit by another $1.2 trillion to $1.5 trillion. If the supercommittee didn’t broker a deal, automatic spending cuts of $1.2 trillion over the next decade — the sequester — would go into effect. The sequester was designed to be so potentially destructive that the supercommittee would surely reach a deal to avert it.

The sequester’s origins can’t be blamed on one person — or one party. Republicans insisted on a trigger for automatic cuts; Jack Lew, then the White House budget director, suggested the specifics, modeled after a sequester-like mechanism Congress used in the 1980s, but with automatic tax increases added. Republicans rejected the latter but, at the time, took credit for the rest. Obama took the deal to get a debt-ceiling increase. But the president never accepted the prospect that the sequester would occur, nor did he ever agree to take tax increases off the table.

And of course no deal has been reached yet.

2. At least the automatic cuts will reduce runaway spending and begin to control the deficit.

What runaway spending? The $787 billion stimulus was a one-time expenditure that has come and gone. Under current law not including the sequester, non-defense discretionary spending as a share of the economy will shrink to a level not seen in 50 years. Defense spending grew substantially over the past decade, but that pattern has slowed and will soon end. Additional reductions must be achieved intelligently, tied to legitimate national security needs.

The annual budget deficit is projected to fall by almost 50 percent in 2013 compared with the height of the recession. Reducing the deficit over the long term requires going where the money is — boosting economic growth, controlling health-care costs and increasing revenue to handle the expense of an aging population. Deeper discretionary-spending cuts are counterproductive; immediate cuts, as Europe has made recently, could lead to a recession and bigger deficits.

I guess the Republicans want us to be like Greece after all.

And finally, one for the Democrats.

4. The cuts are so large, they will be catastrophic.

The administration has released state-by-state estimates of the sequester and highlighted the cutbacks most likely to harm or inconvenience the public. The reality is not so immediate or dramatic. The damage will accumulate in less visible ways, as irrational reductions in public spending impede economic growth and job creation; reduce investments in education, infrastructure and scientific research; and further disrupt the routines of a modern democracy. The longer the sequester remains in place, the more harm is inflicted.

So it may take a while to feel the cuts.  Maybe long enough for the Obama Administration to submit a sensible budget that everyone can agree on.  And no, I’m not smoking anything.  Just counting on mayors and governors to continue to put the pressure on Congress.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s