Oct. 22, 2011 – 1:19 p.m.
Political Economy: Sequester, or Bust
By John Cranford, CQ Columnist
Rumblings from the right and left in opposition to the work of the joint deficit reduction committee are becoming increasingly loud. Many at the extremes of the political spectrum insist that the joint committee — working as it must in a bipartisan fashion — can do no good.
This cynical sentiment derives from the fact that achieving a compromise acceptable to at least some lawmakers from each party will require each to yield what they regard as their political high ground. Regardless of whatever fig leaves they might use to hide the dirty parts, Democrats will almost certainly have to acquiesce to entitlement cuts and Republicans will have to accept revenue increases.
This has been true all along. But it’s becoming evident to some on both sides that the heretofore heretical option of up to $1.2 trillion in automatic, across-the-board spending cuts would be preferable to any deficit reduction agreement reached by the joint committee.
That isn’t at all the way this was supposed to play out.
Automatic cuts — called a sequester in congressional budget parlance — will be triggered if the joint committee can’t meet its goal or if Congress refuses to pass a deal that the committee brokers. The threat of deep and painful cuts, evenly divided between military and non-military accounts, was presumed to be sufficiently real to bring both sides to the table.
But maybe not.
In his regular blog earlier this month, Cato Institute senior fellow Daniel J. Mitchell — a big-government foe of the first order — made the case for a sequester instead of a negotiated joint committee deal.
To Mitchell, the risk that the committee might in the end propose a tax increase to provide some of its deficit savings is too dangerous to contemplate. He fears that Republicans might acquiesce to a tax increase, “causing themselves political damage, undermining the economy and enabling bigger government.”
To avoid any chance of that happening, GOP members of the joint committee should hold out for spending cuts only. Then, if the Democrats don’t capitulate, Republicans should accept the consequences of a sequester.
A mirror image of that perspective can be found on the opposite side of the ideological divide. Roll Call’s Meredith Shiner reported last week on a private briefing book prepared for Democrats on the joint committee by the left-leaning Center on Budget and Policy Priorities. In the Center’s analysis, a sequester would not have “serious adverse effects on the economy,” Shiner reported.
Instead, the question is whether a negotiated deficit reduction agreement would do more harm to entitlement programs than a sequester, the Center told Democrats.
The clear inference is that a deal might prove to be more damaging in the eyes of the left, particularly if it doesn’t include higher taxes. That’s because most entitlement spending, particularly that which benefits the poor, would be exempt from the automatic cuts. And reductions in Medicare spending under a sequester would be confined to provider payments and limited in their amount.
Political Economy: Sequester, or Bust
Would They Dare?
So, where does that leave the joint committee and its quest for success?
All signs suggest that the panel members, instead of heeding the advice of those at the ideological poles, are taking their charge seriously and trying to find common ground.
It’s still too early to conclude that they won’t falter as they approach their Thanksgiving deadline. Bipartisan agreement on anything is in short supply these days.
But on the other hand, they just might succeed. Then, of course, the same partisan pressures to resist compromise will come to bear on the full congressional membership. At that point, all lawmakers will have to decide which outcome will most turn off voters: compromise or failure. Does anyone recall the public and financial-market fallout from the debt limit debacle this summer?
What’s interesting in watching this play out, though, is the degree to which the perceived danger of a sequester appears to be less of a concern. Conventional wisdom says automatic cuts would be so draconian that they must be avoided at all cost. What both sides may really believe is that a sequester would be bad and therefore would never be allowed to stand.
In recent weeks, lawmakers from both parties and Defense Secretary
That may result in the ultimate cynical maneuver: Blow up the negotiations, let the sequester kick in, and then repeal it. But Congress would never behave in such a manner, would it?