There Will Be No Budget Deal
We’re less than a month away now from the sequester, the beginning of the deep budget cuts that will kick in automatically if President Obama and Congress don’t come to a budget deal. I have a news flash for you: There is not going to be any deal in the next 25 days. And here’s another news flash: In the Republican tug-of-war between those who want to protect the Pentagon and those who want to cut spending and damn the consequences, it’s looking like the latter are winning. If they get their way, it’s also almost certain that the austerity the cuts induce will cost a lot of jobs and hurt the economy. So the only thing for Barack Obama to do now is start agitating to make sure the American public blames the right culpable party here.
First, a little info on the cuts and their predicted impact. These across-the-board cuts to defense programs and domestic discretionary programs (not to Social Security and entitlements) would start to take effect March 1, which the parties agreed to in the fiscal cliff deal. Over the next seven months, this would mean $55 billion in defense cuts and $27 billion in domestic cuts. Those are pretty steep cuts.
That’s austerity. Austerity, in difficult economic times, which these still are, is never good. Anything that takes money out of the economy isn’t good. This is the great paradox of the Republican position that “we” have to learn to live within our means. There’s never been more insidious nonsense put about the land. The only thing severe cutbacks would do is put the recovery at risk.
A New York Times editorial Monday noted that at least a million jobs might be lost, according to a Congressional Budget Office report, if the sequester cuts go into effect. To give you a point of comparison, the economy created 2.2 million jobs last year. And it was a decent year, no better. Imagine subtracting a million to 1.4 million from whatever positive number we get this year. That’s a pretty devastating hit.
Right now, though, it sounds as if that’s where the GOP wants to take us. The bread crumbs are being dropped—senators and House members are allowing themselves to be quoted as saying that maybe this is just the medicine the country needs, even including the defense cuts.
This is an important change in momentum. Last year, Republicans generally sounded more alarmed about Pentagon cuts than about spending and the budget deficit. But now, that’s flipping. Oklahoma Sen. Tom Coburn said, “I think sequester is going to happen. I think the people want it to happen.” South Carolina GOP Congressman Mick Mulvaney said recently, “Gridlock is leading to spending reductions. If the government does nothing, spending goes down. We have to claim victory.”
There’s something quite amusing about this, as Forbes’s Loren Thompson wrote yesterday. In allowing these defense cuts to go through, Republicans would be harming their own constituents, because there are considerably more military bases and supply depots and the like in red states than in blue states. Thompson noted that there are two bases in Mulvaney’s district where thousands of employees could be furloughed or fired.
What’s going on here? Undoubtedly, they’re at the end of their rope. They came to Washington to cut spending. The sequester has been delayed twice. Enough already. This would be understandable if their positions weren’t so economically thick-headed. But it’s what they believe, or at least “believe.”
It’s hard to know what they really believe, and it’s the same old guessing game. One of two things is true. One, they so despise and distrust government spending that they really do believe no good can possibly come of it and so spending has to be sliced, and if tossing the Pentagon on the fire is the only way to get it started, well, so be it. Two, they know better, but they figure well, if the economy does tank because of our collective stupid action, Obama’s the president, he’ll get the blame.
On Tuesday afternoon, Obama called on the Republicans to pass a smaller package of cuts and revenues to tide us all over for a bit, and to extend the major deadline another few months. The Republicans have declared this idea dead on arrival, especially the revenue part. He did note in his remarks that inaction puts "the jobs of thousands of Americans" at risk, but he really should hammer this point home repeatedly in the coming days.
So what I would love more than anything is to see Obama go down to Mulvaney’s district in South Carolina and several other districts like it and say that if these cuts go through, it’s going to have a serious negative impact on the local economy.
Ideally, of course, there might be some kind of agreement, which I say not for anyone’s political sake but for the sake of America’s workers and the economy. The effect of these cuts would be real and bad. If nothing else, the best Obama can do is make sure that the American people know who’s at fault when the economy does tank. Not the loftiest aspiration, but it’s hard to be lofty when you’re being dragged through the sewer.
Editor's note: This piece, originally posted Tuesday morning, was updated Tuesday afternoon following President Obama's press conference.