As the sequester gets closer, recall the end of last year, the initial report relaying that the economy actually declined by 0.1 percent in the fourth quarter. Analysts pointed to a plunge in defense spending for an explanation. They might well have added that the slowdown served as prologue for the automatic, across-the-board spending reductions set for Friday, the $85 billion for this year part of $1.2 trillion for the decade.
The Obama White House and congressional Republicans have engaged in a silly blame game over the sequester. Both sides supported the idea 18 months ago as a way out of the impasse over raising the debt-ceiling. If the president put forward the concept to avoid something worse, a default, John Boehner, the House speaker, crowed that he got “98 percent” of what he wanted.
The idea was that the sequester cuts would be so unpalatable that Republicans and Democrats would hatch a compromise plan to reduce the federal deficit. They have yet to do so, and barring the usual deal-making in the nick of time, the spending reductions are likely to begin.
Recall, too, that the Republican-driven “crisis” around the debt-ceiling slowed the economy and job creation. Now economists forecast the same for the sequester, the nonpartisan Congressional Budget Office among those projecting that the spending reductions would trim from 0.2 to 1 percentage point off economic growth for the year. That could translate into 200,000 or so fewer jobs, far from a smart path for a weak economy.
President Obama has been making appearances to stress the harm in the reductions. The White House issued a briefing paper outlining the state-by-state impact. Ohio would lose roughly $25 million in funding for public schools. Head Start, work-study programs for lower-income college students, vaccines for children would suffer, if not immediately then through steady erosion.
The folly of the sequester resides in the programs targeted, the true driver of the deficit, health-care spending, mostly off the table. Defense spending shouldn’t be cut so arbitrarily. Neither should discretionary spending that covers basic operations of the government and now at a lower level than when the president entered office.
Congressional Republicans want to leverage the moment. The president long ago should have seized the initiative and proposed more precise and thoughtful spending cuts for the long term. As it is, he remains correct about a balanced approach to dealing with the deficit. Where is the good sense in such spending reductions when wealthy hedge fund operators easily could pay taxes at a higher rate without affecting the economy?