A few days ago, the nation arrived at the start of the budget cuts that define “sequestration”. Those reductions in spending will be phased in over time in an effort to minimize their impact on what is admittedly a weak recovery the most dominant feature of which remains slow job growth.
While no one, not even our leading economists, can predict the exact effects of the cuts, there is wide agreement that they will hurt the economy. For example, one estimate has placed job loss at an estimated 750,000, and a drop in GDP of anywhere from .5 to 1%. Keep in mind that when 750,000 people join the ranks of the unemployed, their adjusted gross incomes drop such that they pay less income tax. Since a balanced budget depends on revenues remaining constant while outlays are reduced, how can less revenues possibly help? This last question should start you moving towards the conclusion that the adoption of sequestration was and remains a bad thing. Who then is to blame for it coming into being? The answer requires a critical examination of the last two years’ worth of “back-and-forth” between the president and the Congress; notably, the GOP-controlled House. Be assured that there is plenty of blame to go around but that its distribution should be asymmetrical.
Turn back to 2011 when it was time for the House to approve the paying of our debts incurred during the last budget cycle and that involved money already spent. In the past, that approval has been a pro forma matter. While individual members of Congress have objected, no group of them has ever balked and at the same time demanded draconian cuts in spending as a pre-condition for their eventual approval. I described this state of affairs in greater detail in my blog “The Looming Debt Ceiling Fight” of 1-3-13, and in the preceding paragraph.
In an effort to get beyond this impasse, President Obama offered John Boehner the 10 : 1 budget that came to be called a “grand bargain”, involving as it did $10 in cuts for every dollar in new taxes. The Speaker could not sell this arrangement to a sufficient number of his House cohorts, notably members of the Tea Party caucus who wanted even deeper cuts and no new taxes. As a result, the original deal fell through and further negotiations to find a compromise did not materialize.
With matters at something of a dead end, the idea was floated to form a bipartisan “Super-Committee” from the House and Senate that would seek to come up with a slate of cuts and tax increases that would be mutually acceptable and thus more likely to pass both chambers of Congress. Those negotiations did not fare well and a week before they were set to end, the delegation of House Republicans led by Majority Leader Eric Cantor simply folded their tents and walked out.
It was understood from the outset of the Super-Committee’s work, that if the body failed to reach an acceptable package of cuts and taxes by a date certain, automatic spending cuts in the amount of $85 billion dollars would be sequestered to give the president and the House more time to find some common ground. The cuts were to come from programs favored by Republicans (e.g. defense) and some by Democrats (discretionary spending). This put on the block, cuts to cherished programs of such a magnitude that productive bargaining would be forced upon the president and Congress. Of course, as we now know, that’s not the way things have worked out; at least not yet. So, let the “blame game” begin.
The proposal to sequester funds was not new. Sequestrations had occurred in 1985 and 1990 under conditions that differed dramatically from those extant today. The current idea came from Jack Lew, a member of the Obama administration who was recently confirmed as the new Secretary of the Treasury. It was supported and made public by the president which subsequently led conservatives to claim that since it was indeed his idea, the responsibility for bringing the cuts to an end resided solely with Obama. Lost in this uni-directional finger-pointing was the fact that 174 House Republicans voted for sequestration, including the entire leadership of Boehner, Cantor, McCarthy and Ryan. Once this bill had passed, the Speaker crowed “I got 98% of what I wanted. I’m pretty happy”.
What you can gather from this last paragraph is that there is plenty of guilt to go around. The president is not exempt. But, the position taken here is that blame should be assigned asymmetrically. This entire fiasco was given impetus by Tea Party Republicans and their refusal to raise the debt ceiling. It was the House GOP delegation that abandoned the deliberations of the Super-Committee, and it is now House Republicans who want to leave the solution entirely in the president’s hands, all the better so that he must absorb voters’ displeasure over whatever spending cuts he were to decide upon. This is not responsible governance. It’s the worst kind of dishonest political game-playing and cowardice to boot.
In my next blog I’ll briefly outline a plan to end the sequestration that Obama has put on the table as a point where negotiations should be re-started. For those interested, that plan can be accessed by Googling the official White House website. In the meantime, don’t believe conservatives claimS that it’s all the president’s fault, and that he has done nothing to move matters forward. Nothing could be farther from the truth.