Will the $85 billion in spending reductions, known as the sequester, bring harm to the economy? John Boehner says he doesn’t know. If that departs from what the House speaker has argued in the past, having even used the word “meat ax,” let’s agree there are more capable economic forecasters. Douglas Elmendorf, the director of the Congressional Budget Office, told lawmakers last week that the sequester would reduce growth by 0.6 percentage points, from 2 percent to 1.4 percent, costing 750,000 jobs by year’s end.
Elmendorf has company. Other analysts and economists of varying stripes have shared the same concern. The spending reductions may seem small, part of a $3.7 trillion federal budget, yet the cuts come largely from a narrow slice of the budget, discretionary spending, or such items as food safety, education and help for those with low incomes. More, the impact will be magnified because the reductions must be accomplished with just one-half of the budget year remaining.
This isn’t an area of the budget afflicted by runaway spending. Even before the sequester, nondefense discretionary spending has been declining, heading as a share of the economy to its lowest levels since the 1950s.
Any smart plan to deal with the country’s long-term deficits would avoid adding to poverty and inequality or putting the weak recovery at risk. Yet the sequester sets in motion an 11 percent reduction in benefits for the long-term unemployed, checks reduced by $130 month, or money that won’t be spent in local economies. A reduction in the highly successful nutrition program for women, infants and children (WIC) may translate into roughly 775,000 losing services that, among other things, reduce anemia and increase birth weights.
As many as 100,000 low-income families may lose housing vouchers. President Obama has pointed to the likelihood of longer security lines at airports as guards take required furloughs. And if airlines reduce flights in response? That means fewer federal fees paid by airlines, leading to the perverse outcome of adding to the deficit.
The president and his Democratic colleagues would do well to show how spending cuts could be accomplished in a measured, humane and effective way. They haven’t taken such a lead. At the same time, Speaker Boehner and other Republicans fudge things when they suggest the White House hasn’t been responsive. The president does have a plan for avoiding the sequester, a mix of spending reductions and revenue increases. He has opened the door to a lower cost-of-living increase for Social Security beneficiaries and greater means-testing for Medicare coverage.
The trouble has been that of late, too many Republicans have shown practically no interest in something better than the sequester, in spending cuts and revenue increases designed to avoid immediate harm to the economy, or the unnecessary disruption to so many lives.