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Obama, GOP Battle Over Sequestration Cuts

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In just ten days, the sequestration cuts that were delayed from January 1st as part of the deal that resolved the conflict over the expiring Bush Tax Cuts will take effect unless Congress passes some other bill to avoid them. As things stand now, that doesn’t seem to be at all likely. In what has become something of a switch in positions, the President has been spending the past two months calling on Congress to do something about cuts that he claims will be destructive to the economy while Republicans are, for the most part, now insisting that the cuts that the once said would “devastate” the military should be allowed to go through. Given this, it’s quite improbable that anything is going to happen over the next two weeks to prevent sequestration from actually happening, but that isn’t stopping the President from trying to persuade Congress to act:

President Barack Obama on Tuesday used the threat of cuts to emergency services as his latest attempt to increase pressure on Congress to avert the automatic spending cuts looming to take effect in just 10 days.

The “meat cleaver approach” of the sequester, Obama said, would “jeopardize our military readiness, it will eviscerate job creating investments in education and energy and medical research.”

Back in Washington from a long weekend of golfing in Florida, Obama accused Republicans of favoring deficit reduction measures that he argued benefit the rich and hurt most Americans. He pushed again for an agreement that would replace $85 billion in cuts by the end of the current fiscal year with a $110 billion package that would cut spending and end some tax loopholes.

An agreement on a larger deal has remained elusive with less than two weeks to go until the deadline, and Obama is looking to push Republicans to a deal.

“Are you willing to see a bunch of first responders lose their jobs because you want to protect a special interest tax loophole? Are you willing to have teachers laid off or kids not have access to Head Start? Or deeper cuts in student loan programs?” he asked, appearing in the Eisenhower Executive Office Building with a group of first responders lined up behind him.

It’s “troubling that just 10 days from now, Congress just might allow a series of automatic, severe budget cuts to take place,” Obama said. “This is not an abstraction: people will lose their jobs.”

The sequester cuts, totaling $1.2 trillion over the course of a decade, were agreed to in the summer of 2011 in a deal to raise the debt ceiling and were intended to be so unpalatable that the White House and Congress would find a way to avert them by developing an alternate long-term deficit reduction plan. Half the cuts would be to non-combat military spending while the other half would be to domestic discretionary spending.

The cuts were originally set to begin on Jan. 1, but the White House and congressional Republicans agreed then to a deal that postponed the cuts for two months in hopes that a longer-term agreement could be reached by the end of February.

The first responders who joined Obama at the event would lose their jobs if the sequester were to take effect, the White House said, and defense contractors are expected to be especially hard-hit. In all, the non-partisan Congressional Budget Office said last week, the cuts could result in 750,000 job losses by the end of the year.

Not surprisingly, Republicans didn’t respond very well to the President:

Congressional Republican leaders slammed President Barack Obama’s sequester speech Tuesday with only two weeks to go until massive across-the-board spending cuts take effect.

House Speaker John Boehner asked what “spending is the president willing to cut” to keep first responders employed.

“Washington Democrats’ newfound concern about the president’s sequester is appreciated, but words alone won’t avert it,” Boehner said in a statement. “Replacing the president’s sequester will require a plan to cut spending that will put us on the path to a budget that is balanced in 10 years.”

And Senate Minority Leader Mitch McConnell (R-Ky.) said Obama proved Tuesday that “more than three months after the November election, President Obama still prefers campaign events to common sense, bipartisan action.”

“Surely the President won’t cut funds to first responders when just last year Washington handed out an estimated $115 billion in payments to individuals who weren’t even eligible to receive them, or at a time when 11 different government agencies are funding 90 different green energy programs,” McConnell said in a statement. “That would be a terrible and entirely unnecessary choice by a President who claims to want bipartisan reform.”

Boehner’s office declined a POLITICO request to speak to the Ohio Republican. Congress is out of session this week as the sequester deadline looms.

This sounds an awful lot like the usual political back and forth we see in Washington as we get closer to one of these self-imposed deadlines without a resolution in sight. Typically, we end up getting a last minute deal that satisfies nobody and doesn’t really solve the problem, and I’m sure that a lot of people think that this is exactly what will happen in this time around. I’m not so sure. For one thing, this seems to be the rare political showdown where both sides seem to think that they can win. Notwithstanding their previous rhetoric about the cuts to the defense budget, Republicans appear to see this as their best opportunity to force some not inconsiderable cuts to the Federal Budget, and all they have to do is do nothing and let the cuts take effect. President Obama, on the other hand, seems to/ have a different strategy, and Michael Tomasky suggests that he’s set a trap for the GOP:

 [I]t sure isn’t going to be looking very responsible to people, as the March 1 sequestration deadline approaches, for Republicans to be going before the cameras and saying that the cuts are unfortunate but necessary medicine, or whatever formulation they come up with. They’ve wanted these spending reductions for two years. It hardly matters much who invented the mechanism for the cuts. What matters, as the Republicans will find out, is that the people don’t want them.

Perhaps Tomasky is right and the GOP will end up paying a political price for insisting on the sequestration cuts. To be honest, if it happens they would kind of deserve it for the manner in which they’ve pontificated about the very real problems of the Federal Deficit and National Debt over the past two years but not really done anything constructive about either of them. At the same time, though, I think they’ve finally, albeit inadvertently, hit upon precisely the right strategy here. Contrary to what President Obama and the defense hawks there is nothing “disastrous” about these sequestration cuts. They will not sink the economy, and they will not leave law enforcement and national defense in a lurch. Anyone who is suggesting that they will exaggerating the issue solely for political gain. In the grand scheme of things, the cuts will be barely noticeable, but they will be a start on the long road of bringing out fiscal house in order. And if there is a little bit of pain involved, that’s just reality. We put ourselves in this situation, and we’re not going to get out of it without paying a price. The question is whether we pay it now or later.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Spartacus says:

    Doug wrote:

    They will not sink the economy, and they will not leave law enforcement and national defense in a lurch. Anyone who is suggesting that they will exaggerating the issue solely for political gain. In the grand scheme of things, the cuts will be barely noticeable, . . .

    Just so we have some way of evaluating this statement, how much would GDP have to shrink in order for you to consider the cuts to be something more than “barely noticeable”?

    Highly-rated. Helpful or Unhelpful: Thumb up 20 Thumb down 0

  2. Moosebreath says:

    “They will not sink the economy”

    Well, Janet Yellin considers the country’s lack of fiscal support to have severely reduced the growth in the last few years. Money quote, “In the year following the end of the recession, discretionary fiscal policy at the federal, state, and local levels boosted growth at roughly the same pace as in past recoveries, as exhibit 3 indicates. But instead of contributing to growth thereafter, discretionary fiscal policy this time has actually acted to restrain the recovery.”

    In other words, the stimulus worked, until the states began to cut their budgets, which dragged the economy down with it. And the sequester will do more of it. Austerity as a response to recession has worked out poorly throughout the places it’s been tried.

    Doug, the last three years have been the kind of response to hard times that Libertarians have said would grow the economy, by cutting the public sector and thus unleashing the private sector. Just another thing they are wrong about.

    Highly-rated. Helpful or Unhelpful: Thumb up 21 Thumb down 1

  3. edmondo says:

    If $45 billion in cuts to a $3 trillion budget are disasterous then how are we ever going to cut anything? I’m a Democrat and even I don’t believe this bullship from Obama

    Like or Dislike: Thumb up 7 Thumb down 8

  4. Rob in CT says:

    To be fair, I don’t think Doug makes the expansionary austerity argument (which I agree is obviously ridiculous).

    Correct me if I’m wrong, Doug, but here’s how I think Doug sees things:

    1) A lot of past “growth” was bubblicious BS, aided and abetted by a run-up of public debt (and private debt, but we’re talking government policy here).
    2) Doug, being a libertarian, is deeply suspicious of stimulus.
    3) Even if he wasn’t so suspicious of stimulus, the bad fiscal policy pre-recession makes him even less likely to accept stimulus now.
    4) He recognizes that cuts will put a drag on economic growth, but for whatever reason thinks the effect will be quite small (one wonders if he feels that way about comparably-sized tax increases).

    To sum up, I think Doug’s position is “we need to take our medicine, and you know it doesn’t taste that bad!”

    I’m not saying I agree with the above, mind you.

    Like or Dislike: Thumb up 9 Thumb down 0

  5. Rob in CT says:

    @edmondo:

    I think it’s $85B in cuts. This year. Then it ramps up. $1.2T over 10 years, so an average of $120B/yr.

    I agree that $85B is not a huge, scary number, and I have to laugh at O pretending the sequester is going to gut the military or somesuch. That said, I’m not so sure we can be as blaise as Doug regarding the economic impact of the cuts.

    And if we *do* go through with the cuts and we get anemic (or negative!) economic growth, people who called for cuts should have the intellectual integrity to say “I know it sucks but in the long run this will pay off” and NOT “Obama is holding back the economy!” If you’re going to push for austerity, you have to face up to short-term pain in exchange for long-term gain. That’s the trade-off (which is why Keynes gave his famous rejoinder about us all being dead in the long term). So few seem to acknowledge it. It’s frustrating.

    Like or Dislike: Thumb up 6 Thumb down 0

  6. @Rob in CT:

    I for one am willing to accept the consequences of these cuts. As I said above, we’ll have to pay this price at some point so why not get it over with.

    Like or Dislike: Thumb up 4 Thumb down 11

  7. Rob in CT says:

    Right, I get that. And while I’m to your left, I’m ok with that sort of argument. I think the long run matters, and Keynes was being a bit flippant.

    Of course you and I differ in other ways (the “who pays” question), but I find your position far more reasonable than those who argue that cutting government spending is going to “unleash” the private sector. That’s a joke.

    Like or Dislike: Thumb up 3 Thumb down 0

  8. Rob in CT says:

    In the short term, at least.

    Like or Dislike: Thumb up 0 Thumb down 0

  9. gVOR08 says:

    @Doug Mataconis: Who’s this we, white man. You thinking you might get laid off?

    Highly-rated. Helpful or Unhelpful: Thumb up 25 Thumb down 1

  10. john personna says:

    In the best of all possible worlds someone would be doing program by program analysis of costs and returns on investment. Which produces higher tax returns and fewer incarcerations further down the line, pre-school or pell grants? If there are really fail-to-safe nukes, why aren’t we building them, etc.

    Without that best outcome, steady-on, and sequestration both seem poor second and third choices.

    My gut says sequestration will yield more reduction to GDP than short term spending cuts justify. But then, to do better, we’d need a program of program review.

    (Sort of like a science of science policy policy)

    Like or Dislike: Thumb up 5 Thumb down 0

  11. Jeremy R says:

    Perhaps Tomasky is right and the GOP will end up paying a political price for insisting on the sequestration cuts. To be honest, if it happens they would kind of deserve it for the manner in which they’ve pontificated about the very real problems of the Federal Deficit and National Debt over the past two years but not really done anything constructive about either of them.

    How about they deserve it because they used a unprecedented, risky and unpredictable tactic, holding the debt ceiling hostage and intimating that they were actually serious about potentially defaulting, in order to exact concessions they ordinarily wouldn’t have had the political clout to get (based simply on the power the American people gave them through democratic elections). Of the many offers that were desperately advanced to get them to back off their game of Russian Roulette, Sequestration was a part of what they finally accepted.

    Let’s not forget that the Democrats preferred outcome was a clean, timely debt ceiling increase. No Super Committee, no trillion dollar cuts during a weak recovery and no Sequestration. Following the debt-ceiling deal that was forced on them their position has always been that the sequestration cuts should never take place. At least on the Defense side of things, the GOP has also been railing against the sequestration cuts, that is prior to their recent, spectacular flip-flop.

    Flashback ~

    John Boehner:
    http://www.cbsnews.com/8301-18563_162-20086598/boehner-i-got-98-percent-of-what-i-wanted/

    When you look at this final agreement that we came to with the white House, I got 98 percent of what I wanted. I’m pretty happy.

    Mitch McConnell:
    http://www.washingtonpost.com/politics/in-debt-deal-the-triumph-of-the-old-washington/2011/08/02/gIQARSFfqI_story_1.html

    “I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming. And it focuses the Congress on something that must be done.”

    When you make an epicly high stakes gamble and your unprecedented power play unsurprisingly turns out badly, you don’t get to weasel out of responsibility for your actions.

    Highly-rated. Helpful or Unhelpful: Thumb up 18 Thumb down 1

  12. Moosebreath says:

    @Rob in CT:

    I think there’s also a timing issue, in that we need to wait until the economy is stronger before implementing measures to cut the deficit more than has already been done over the last 3 years. I tend to favor something like what Kevin Drum was pushing last year, linking the spending cuts and revenue enhancements to economic criteria (e.g., specific cuts and loophole closures go into effect after 2 straight quarters of 3% GDP growth).

    Like or Dislike: Thumb up 4 Thumb down 0

  13. @john personna:

    (Sort of like a science of science policy policy)

    “Yes, yes, yes, I do see that there is a real dilemma here. In that, while it has been government policy to regard policy as a responsibility of Ministers and administration as a responsibility of Officials, the questions of administrative policy can cause confusion between the policy of administration and the administration of policy, especially when responsibility for the administration of the policy of administration conflicts, or overlaps with, responsibility for the policy of the administration of policy.”

    Like or Dislike: Thumb up 2 Thumb down 0

  14. Tsar Nicholas says:

    I got a kick out of this graf:

    Are you willing to see a bunch of first responders lose their jobs because you want to protect a special interest tax loophole? Are you willing to have teachers laid off or kids not have access to Head Start? Or deeper cuts in student loan programs?” [President Obama] asked, appearing in the Eisenhower Executive Office Building with a group of first responders lined up behind him.

    Well, allow me to retort:

    How about with one stroke of one pen we preempt and eliminate all defined-benefit pension plans for unionized public sector workers, including teachers, and we impose a national standard of merit-based compensation for all public money K-12 and secondary education teachers and administrators? In exchange we cut $100 billion annual dollars of defense spending, for the next decade, but targeted among unnecessary and too-costly weapons programs, rather than indiscriminately?

    Head start should be scrapped. Federal subsidies of student loans should be scrapped. Rather than that nonsense we should have a national K-12 school voucher program. Publicly-subsidized student loans should be eliminated except in connection with hard sciences. The annual quota for H-1B visas should be increased ten-fold. The federal Department of Education should be de-funded. NCLB should be repealed. While we’re at it let’s de-fund Commerce, HUD and the EEOC. And cut in half the funding for EPA. Then scrap Medicare for everyone under age 50 and increase ten-fold the annual contribution caps for HSAs.

    Obviously the chances of any of that happening are only slightly less than zero.point.zero or just about the same as Kobe and Shaq coming out as lovers.

    Ultimately the prospects are grim. We owe 16 trillion dollars. The economy hasn’t posted a good quarter of GDP growth, much less a decent year of GDP growth, for the better part of an entire decade. Q1 ’06 was the last time we posted even 5.0% of quarterly GDP growth. Nearly 50 million people are on food stamps. Nearly 5 million people have been unemployed consecutively for in excess of 26 weeks, despite making best efforts to find work. Nearly 23 million people are underemployed in one way, shape or form, and that doesn’t even count the millions who’ve given up entirely and are not part of the measured stats. If the country was a stock it’d be delisted and then placed into receivership.

    Like or Dislike: Thumb up 4 Thumb down 12

  15. Mikey says:

    @edmondo:

    If $45 billion in cuts to a $3 trillion budget are disasterous then how are we ever going to cut anything?

    Your question is the root of its own answer.

    Like or Dislike: Thumb up 1 Thumb down 0

  16. Ron Beasley says:

    Bring it on – I don’t see any other way we can get defense cuts. But then I thought they should let all the Bush tax cuts expire too. Is it going to hurt – yes.

    Like or Dislike: Thumb up 1 Thumb down 0

  17. john personna says:

    @Stormy Dragon:

    I only caught a few episodes of Yes, Minister. Maybe that would be a good one to binge-watch or whatever they call it these days.

    Like or Dislike: Thumb up 1 Thumb down 1

  18. grumpy realist says:

    @Tsar Nicholas: Hope you like having a toxic waste dump in your backyard, Tsar. And if you cut the Department of Commerce you’ve just gotten rid of the Patent and Trademark Office. You want to get rid of US patents and trademarks? Somehow I think that a lot of US businesses will be extremely angry at you for that….

    Like or Dislike: Thumb up 6 Thumb down 1

  19. john personna says:

    @grumpy realist:

    A couple economists at the federal reserve(!) just published saying that abolishing patents would be a net win for US GDP. You are right though that corporations, especially large ones with patent portfolios, would be upset. They have a rent to collect.

    Like or Dislike: Thumb up 4 Thumb down 0

  20. john personna says:

    (Overall I think Tsar’s list is intemperate. Some might be justified by data driven analysis, but some is simple abandonment. An end to the department of education would be an end to transfers to poorer states, sentencing them to a destructive feedback cycle: less money, less education, less money, …

    Like or Dislike: Thumb up 4 Thumb down 0

  21. Rafer Janders says:

    @Doug Mataconis:

    I for one am willing to accept the consequences of these cuts.

    Speaking as another well-paid white man with a law degree, I too am willing to accept the consequences of these cuts. Of course, if I was disabled, or an orphan, or had a job to be furloughed, or really was part of any vulnerable population that depended on the federal services that were going to be cut, I might think different. But, y’know, I got mine.

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  22. David says:

    As someone who is one event away from disability, who’s job was outsourced twice in 4 years, and the last time left me with a company with no long term disability insurance, I think a little differently. I’m putting as much money as I can away for the inevitable, but without the safety net (of which I have been paying into for 30 plus years) I am totally screwed at this point.

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  23. wr says:

    @Tsar Nicholas: Why don’t we just execute anyone with a net worth less than five million dollars? Or better yet, set up camps and put them to work? Since it’s clear that to you the only purpose of a government is to make life easier for those who already have it easy, why pretend it should be anything else?

    Like or Dislike: Thumb up 9 Thumb down 1

  24. I would bet very good money that the writer has no skin in the game, that he will not be personally affected. What is the writer willing to give up, that he so graciously offers up others? Companies and banks, like the ones bailed out, should be what makes the biggest sacrifice.

    Like or Dislike: Thumb up 11 Thumb down 0

  25. Todd says:

    @Doug Mataconis:

    I for one am willing to accept the consequences of these cuts

    How magnanimous of you Doug. Real people are going to lose their jobs, and have their lives significantly disrupted because of this. But hey, as long as you’re willing to accept the consequences, then I guess it’s all good.

    Oh yea, an though I can’t speak for law enforcement I can report first hand that even just planning for the possibility of these sequestration cuts is already having a negative effect on military training and readiness.

    Like or Dislike: Thumb up 12 Thumb down 0

  26. superdestroyer says:

    @Moosebreath:

    Giving the government an excuse to not make cuts means that the cuts will never happen. It is amazing that progressives were claiming that Republicans will never support real cuts and then when Republicans agree to cuts, the same progressives demagogue the Republicans.

    What this is really showing is that Democrats will never make cuts without being forced and that Democrats really want a bigger government and for spending to grow.

    Like or Dislike: Thumb up 0 Thumb down 8

  27. Tillman says:

    @Tsar Nicholas:

    How about with one stroke of one pen we preempt and eliminate all defined-benefit pension plans for unionized public sector workers, including teachers, police officers, and firefighters

    Fixed that for you.

    I mean, I’m positive you didn’t intend to leave out the other unionized public sector workers besides the teachers. Why, that’d be just cliche.

    Like or Dislike: Thumb up 11 Thumb down 0

  28. grumpy realist says:

    @john personna: Well, there is the fact that trademark and patent law is quite useful when dealing with counterfeiters. Otherwise, it can be very hard to go after them.

    Pharmaceutical patents are pretty much a given in the industry. There’s so much up-front cost in developing a drug and getting it through the FDA that you need some sort of a monopoly, at least for a while. Generic manufacturing piggybacks the fact that the dead ends in pharmaceutical research end up getting done by the patent-owning companies. If it were able to be cheaper to develop individual drugs and get them through testing, I could see getting rid of or cutting back on pharmaceutical patents.

    A lot of us in the patent field would love to see the end of computer software patents and business method patents. The AIA has tweaked this a bit and there are some recent SCOTUS cases which are really trying to put the kibosh on whole-scale overly-broad patents…but the Federal Circuit isn’t having any part of it. (Patent law: the only area of the law where SCOTUS can make a decision and everyone lower down ignores it.)

    Like or Dislike: Thumb up 2 Thumb down 0

  29. rudderpedals says:

    When fixed across the board cuts to government spending is the answer someone has asked the wrong (politically motivated) question. If it weren’t politically motivated we’d have a choice between spending more now, doing nothing, or cutting now, instead of this foolish lesser of two evils binary choice from the last congress. From here outside the beltway it’s still a mess and cutting spending will only make it worse.

    Like or Dislike: Thumb up 3 Thumb down 0

  30. john personna says:

    @Todd:

    Oh yea, an though I can’t speak for law enforcement I can report first hand that even just planning for the possibility of these sequestration cuts is already having a negative effect on military training and readiness.

    Related: Congress Is Forcing The Army To Buy Tanks It Neither Needs Nor Wants

    So what will happen? Will the sequester cancel the tanks and other mandated purchases, or will they live on (because they are specified) while training etc. is cut (because it is not congressionally specified)?

    Our dysfunctional congress bites us twice.

    Like or Dislike: Thumb up 5 Thumb down 0

  31. john personna says:

    @grumpy realist:

    A lot of us in the patent field would love to see the end of computer software patents and business method patents.

    That would be plenty.

    Like or Dislike: Thumb up 4 Thumb down 0

  32. Ben Wolf says:

    Sequestration in the first year will reduce GDP growth by roughly 1%. Combined with tax increases we’re looking at zero real growth.

    The whole thing is dumb: we’re focusing on deficit reduction when deficits are already falling rapidly without intervention. Did no one notice the horrid growth in Q4 2012 just happened to coincide with average monthly deficits falling from $90 billion to $55 billion, or that government has run surpluses in December and January?

    With every day our situation looks more like 1937 all over again.

    Like or Dislike: Thumb up 11 Thumb down 0

  33. anjin-san says:

    I for one am willing to accept the consequences of these cuts

    Thats nice. The mental health care professionals I know are pretty alarmed about the whole thing. Community mental health care has already been cut to the bone and beyond.

    Guess if some crazy people die its just not that big of a deal. We have plenty of them, after all.

    Like or Dislike: Thumb up 9 Thumb down 0

  34. Todd says:

    @john personna:

    So what will happen? Will the sequester cancel the tanks and other mandated purchases, or will they live on (because they are specified) while training etc. is cut

    In the short term, the cuts are going to come from operations & maintenance, and travel budgets … that’s where the easy money is. Also DOD civillians are likely to take a pretty significant hit if these cuts actually take effect. Most will be furloughed 1 day per week for the rest of the FY, and those who were hired on temporary contracts may be terminated almost immediately. Cutting weapons system contracts is a much more complicated endeavor.

    Like or Dislike: Thumb up 3 Thumb down 0

  35. Ben Wolf says:

    @Moosebreath:

    I tend to favor something like what Kevin Drum was pushing last year, linking the spending cuts and revenue enhancements to economic criteria (e.g., specific cuts and loophole closures go into effect after 2 straight quarters of 3% GDP growth).

    The budget balance will correct simply by winding down wars and getting the country to true full employment, but we run a $500 – $600 billion current account deficit annually and the reality is that government will have to spend that much back into the economy at a minimum to prevent a recurrence of the credit bubble and resulting depression.

    The private sector can only maintain a positive income balance if government maintains a negative balance.

    Like or Dislike: Thumb up 3 Thumb down 0

  36. Todd says:

    @Ben Wolf:

    With every day our situation looks more like 1937 all over again.

    Irrational fear of imaginary inflation is the most probable cause our next real recession. :-(

    Like or Dislike: Thumb up 8 Thumb down 0

  37. john personna says:

    Related: Good News on Health Care Costs and the Budget

    Here’s some good news on the fiscal front: projected Medicare spending over the 2011-2020 period has fallen by more than $500 billion since late 2010 — based on a comparison of the latest Congressional Budget Office (CBO) projections with those of August 2010. …

    The deficit hawks want to hurry and cut spending now. Their goal, after all, is smaller government and lower taxes on the wealthy needed to support it. Thus, they need to get the cuts in place before people figure out that they’ve been misled about the immediacy of the problem — the scary projections are down the road, not tomorrow — and that the problem is not as big as we thought.

    Like or Dislike: Thumb up 3 Thumb down 0

  38. C. Clavin says:

    This is bizarre…
    I’m OK with the sequester going thru….if that’s the only way to get defense cuts…bravo.
    But WTF is with Doug??? All he does is predict double dip recession and cry like a little girl about the slow recovery. Now he is asking for more of the above. I’m never sure about this…is that sadism or masochism???

    Like or Dislike: Thumb up 9 Thumb down 0

  39. bill says:

    i liked the photo op with all the uniforms in the background- just like the kids at the gun control speech. yes, it’s 2013 and people still fall for this hyperbole, like it’s going to hurt his already crappy employment figures and destroy our booming economy? thank god i live in a recession-proof state.

    Like or Dislike: Thumb up 1 Thumb down 2

  40. C. Clavin says:

    @ JP…
    What no one knows is why HC costs are down.
    It’s good news…and there are several theories…but it’s a mystery right now.
    Related is that most Red States…those laboratories of democracy…have left the set-up of exchanges to the Federal Gov. Actions speak louder than words.

    Like or Dislike: Thumb up 1 Thumb down 0

  41. C. Clavin says:

    bill lives in a recession-proof state….a state of delusion that shows no sign of receding.

    Like or Dislike: Thumb up 8 Thumb down 0

  42. Just 'nutha ig'rant cracker says:

    @Doug Mataconis: I, too, am willing to accept the consequences of these cuts. On the other hand, I currently live outside the country and will be retiring in a few years, so maybe “I am willing to accept..” is easier for me to say. My point–exactly how much do these cuts actually (and directly) affect you, Doug? It seems to me that you are probably mostly getting a free ride on “the consequences,” as am I.

    Like or Dislike: Thumb up 6 Thumb down 0

  43. stonetools says:

    @Doug Mataconis:

    I for one am willing that others accept the consequences of these cuts

    FTFY.

    Like or Dislike: Thumb up 3 Thumb down 0

  44. stonetools says:

    @C. Clavin:

    But WTF is with Doug??? All he does is predict double dip recession and cry like a little girl about the slow recovery. Now he is asking for more of the above. I’m never sure about this…is that sadism or masochism???

    Its libertarianism. And you are right, it doesn’t make any sense. Makes a certain type of person feel good about themselves, though.

    Like or Dislike: Thumb up 6 Thumb down 0

  45. Obama stood in front of his union-organized police and firefighter mannequins this morning. Your house will burn down, your home will be burglarized, your children will be abandoned, the economy will fall apart and you will be unemployed if the federal government is forced to go ahead with 2 point something percent in spending cuts. You are insane to support this prevaricator. When Obama says we need to balance tax increases and spending cuts he carries on the legacy of Ken Lay, Jeffrey Skilling and Andy Fastow by using Enron style accounting — tax increases are actual increases that will burden our children and grandchildren, while spending cuts are reductions in the rate of real spending increases on the self-centered, egocentric Baby Boomer generation. Let me be clear, progressives hate our children.

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  46. anjin-san says:

    @ Let’s Be Free

    home will be burglarized

    Yo – rocket scientist. You might want to check out some of the crime stats in cities that have had police staffing cuts due to budget cuts. Here’s a clue. They are up. Way up.

    I know government jobs are not real jobs, but when they are cut, there are real consequences. It goes against tea party doctrine, but there you go.

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  47. Dazedandconfused says:

    There are various numbers, ranging roughly from $85 to $108 billion “cut” but how much is actually going to be saved largely depends on how much unemployment results.

    There are some reports that as many as a quarter million jobs will be cut in states like VA and CA, pretty much in short order (the Empire can be expected to make it as painful as possible in the private sector -lopping hands is how they “strike back”, of course…), and and that will reduce revenue and raises costs.

    The CBO’s report doesn’t mention an increase in unemployment, let alone analyse the net effects of any.

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  48. walt moffett says:

    Will be entertaining to watch State and local governments deal with the need to increase taxes, reshuffle funds or cut services.

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  49. Jenos Idanian #13 says:

    This is what happens when you give Obama his way. You go along with his proposal, and in the end he’ll be whining and pointing fingers and blaming you for going along with his proposal.

    What’s that line from “Animal House?” “You effed up. You trusted us.”

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  50. bill says:

    @C. Clavin: you’ve been? freeze in the dark as i always say!

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  51. Jeremy R says:

    @Jenos Idanian #13:

    This is what happens when you give Obama his way. You go along with his proposal, and in the end he’ll be whining and pointing fingers and blaming you for going along with his proposal.

    Obama’s proposal was a clean debt ceiling increase and an unconnected grand bargain. The GOP’s proposal was, “Give us matching discretionary spending cuts to debt ceiling increases, or the country gets it.”

    This ridiculous charade based on that Jack Lew – Woodward quote, as if it wasn’t the GOP that blackmailed the Super Committee & Sequester into existence, is just about obscene.

    Let’s not forgot the most childish part of the whole ransom payoff, which McConnell insisted on, which was ceding debt ceiling authority to the President, so congressional GOP could pretend they had no responsibility when it was raised, while at the same time getting to vote their “disapproval”.

    Like or Dislike: Thumb up 9 Thumb down 0

  52. Console says:

    Meh, Doug’s talking out his ass. The biggest problem is the way the cuts are implemented. Not necessarily the fact that there are cuts. You can’t build 95 percent of a road, but that’s essentially what the the sequester means.

    I’ll tell you what the FAA is considering. Furloughs, a hiring freeze, a cuts to air traffic modernization. None of these things are sustainable going forward, and some of it will increase costs in the future.

    Never listen to anyone that talks about spending caps or wholesale percentage cuts without actually talking about the reducing the scope of the mission.

    So not only do you have the economic argument, the sequester involves forcing agencies to make some very stupid and short sighted decisions that will increase costs going forward. It’s lke when you watch these stupid GOP governors turn down infrastructure projects. Penny wise, pound foolish

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  53. Console says:

    And I don’t get this weird ass blame game for the sequester. Hey, news flash, Obama isn’t up for relection. So the whole “It was Obama’s idea and we reluctantly went along with it” thing might not work out to well..

    Like or Dislike: Thumb up 4 Thumb down 0

  54. Richard says:

    In a more reasonable political universe, I think a couple of things should fall into place automatically:

    Deficit reduction and savings for eventual stimulus spending via both cost-cutting and tax increases should trigger when trailing 12-month GDP growth hits 3% and trailing 90-day unemployment falls below 6% and trigger off when trailing 12-month GDP growth dips below 3% or trailing 90-day unemployment rises above 6%.

    Stimulus spending should trigger when unemployment rises above 7% and persist until it falls below 7%.

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  55. OzarkHillbilly says:

    To be honest, if it happens they would kind of deserve it for the manner in which they’ve pontificated about the very real problems of the Federal Deficit and National Debt over the past two years but not really done anything constructive about either of them.

    Doug, how in God’s name can you write this? 2 years? 2 f’n years???? Giving them very grudging credit for what happened in the 90′s, they have been blowing up the deficit for 3 decades.

    Like or Dislike: Thumb up 8 Thumb down 0

  56. Tyrell says:

    What happened to the idea of tax reform? We don’t hear anything about that anymore. If the tax system brought in more of those who pay no taxes for various reasons, think of the revenues.
    What happened to that Simpson-Bowles committee?

    Like or Dislike: Thumb up 1 Thumb down 1

  57. Jenos Idanian #13 says:

    @Jeremy R: Obama’s proposal was a clean debt ceiling increase and an unconnected grand bargain. The GOP’s proposal was, “Give us matching discretionary spending cuts to debt ceiling increases, or the country gets it.”

    Let me paraphrase your description: Obama’s proposal was “give me a blank check, or the country gets it.” The GOP’s proposal was “we ain’t kicking the can down the road any more, we’re dealing with the problem while it still might be manageable.” And Obama’s proposal spelled out how “the country gets it” — the situation we’re in right now.

    Obama gambled that the election and his allies in the press, academia, unions, et al would be able to apply enough pressure to the GOP to get them to cave and give him his blank check. And he lost his bet.

    But enough of the blame game. While it’s entertaining to note how outraged Obama is that his proposal is actually working the way he said it was, it’s long past time we actually addressed our fiscal situation. And that means real spending cuts.

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  58. Mr. Replica says:

    John Boehner:
    http://www.cbsnews.com/8301-18563_162-20086598/boehner-i-got-98-percent-of-what-i-wanted/

    When you look at this final agreement that we came to with the white House, I got 98 percent of what I wanted. I’m pretty happy.

    Mitch McConnell:
    http://www.washingtonpost.com/politics/in-debt-deal-the-triumph-of-the-old-washington/2011/08/02/gIQARSFfqI_story_1.html

    “I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming. And it focuses the Congress on something that must be done.”

    So.. Republicans got what they wanted, but now that it’s politically inconvenient they turn around and blame Obama for it. Sounds about right. SSDD.

    Like or Dislike: Thumb up 10 Thumb down 0

  59. Rob in CT says:

    we run a $500 – $600 billion current account deficit annually and the reality is that government will have to spend that much back into the economy at a minimum to prevent a recurrence of the credit bubble and resulting depression

    Indefinitely, Ben? $500-$600B annually as a baseline deficit, with larger ones when business cycle recessions hit.

    If we model that and assume an average of, say, 3% GDP growth, what happens to the debt-to-GDP ratio? Increase, decrease, or maintain? Anything but decrease seems like a bad idea, given that while borrowing costs are very low now that may well change at some point in the future (quite a ways out, most likely).

    Maybe we ought to try and figure out how to stop bleeding ~$500B a year in trade.

    Like or Dislike: Thumb up 1 Thumb down 0

  60. Rob in CT says:

    Of course they will all try to avoid blame for the result of the cuts, which will be a short-term hit to the economy (at least). Duh. The other guy did it! Well, no. It was a negotiated deal – and as presented it wasn’t supposed to actually happen. It was supposed to be a sword of Damocles that would force them to make a different deal. I still expect that to happen, after all the yelling.

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  61. C. Clavin says:

    It’s worth remembering that Paul Ryan blew up the Simpson/Bowles commision because Republicans didn’t want any revenue increases.
    Ultimately there were revenue increases anyway…there were always going to be revenue increases…we are running historically low tax rates…and the Republicans left an historic economic calamity.
    If Ryan hadn’t f’ed up the Republicans could have gotten a deal that was far to the so-called right of anything Obama has proposed…or what’s going to happen with sequestration.
    Today’s Republicans are either incompetent or stupid or both.

    Like or Dislike: Thumb up 8 Thumb down 0

  62. dennis says:

    @bill:

    i liked the photo op with all the uniforms in the background- just like the kids at the gun control speech. yes, it’s 2013 and people still fall for this hyperbole, like it’s going to hurt his already crappy employment figures and destroy our booming economy? thank god i live in a recession-proof state.

    Well, that was helpful. We’re sure to solve this problem with more of this thinking and attitude.

    I’ll just be glad when a White man is back in the White House so things can go back to normal. **snark**

    Like or Dislike: Thumb up 4 Thumb down 0

  63. stonetools says:

    Frankly, I’m tempted to let the conservatives get their way and let the sequester go through. Then when the contraction that just about every economist predicts happens,

    (1) make the conservatioves OWN their recession
    (2) run against them in 2014 on the platform “Their plan brought back recession, now try our plan”.

    Of course, this would involve careful and unified messaging by the Democrats. Last time , there was really terrible messaging by the Obama Admistration about the stimulus and how it worked. The Administration seemed to just take it for granted that that the stimulus was necessary and would be accepted by the electorate as a good thing. They seemed to be just amazed that the Democrats would be blamed for the stimulus not working perfectly and had no response to Republican demogoguery. Do you remember the speech where Obama explained the crucial role of federal government spending in forestalling economic collapse and sparking recovery in every recession since the 1930s? Me neither.

    The good thing is that Obama has begun, not by calling for Congress to deal with the problem, but by emphasizing that the Democratic Senate has presernted a solution, and that it it is Republicans that have refused to act and who seem to be wiling to let thee sequester go forward. In doing so,he is making it clear from the beginning where the blame lies if the sequester goes through and the economy falters. This isn’t enough: he’s got to use tyo bully pulpit to defend to the public modern economics, and clear away decades of Republican supply-side propoganda. But it’s a start.

    Like or Dislike: Thumb up 3 Thumb down 0

  64. jukeboxgrad says:

    ozark:

    they have been blowing up the deficit for 3 decades

    Correct. In the period 1947-2009, there were 17 years when the deficit exceeded 3% of GDP. All those deficits were produced by R presidents. Reagan, Bush and Bush were in power for 20 years, and 15 of those 20 years are on this list (the other 2 years were Gerald Ford). Average deficit for Reagan, Bush and Bush: 3.9%. Reagan began an era of large GOP deficits, and GWB took the deficit to a level not seen since 1945.

    CBO projects that the deficit in FY15 will be 2.4% of GDP. If CBO is correct, Obama will have achieved what Reagan, Bush and Bush failed to achieve for 15 of the 20 years they were in power: a deficit less than 3% of GDP.

    The GOP now whining about debt and deficits is like a bunch of arsonists returning to the scene dressed as firefighters. History shows that if you want lower deficits, you should put a D in the White House.

    Apologies to the folks who have heard me say this before.

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  65. Jack says:

    Maybe if the president simply took a few less vacations at $7M a pop, some of these first responders jobs could be saved.

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  66. mantis says:

    @Jenos Idanian #13:

    But enough of the blame game.

    Oh, the blame game you brought up and now want to abandon now that you know you are losing the argument?

    More fuel for wingnuts to set themselves on fire with: The PowerPoint That Proves It’s Not Obama’s Sequester After All

    It’s a PowerPoint presentation that Boehner’s office developed with the Republican Policy Committee and sent out to the Capitol Hill GOP on July 31, 2011. Intended to explain the outline of the proposed debt deal, the presentation is titled: “Two Step Approach to Hold President Obama Accountable.”

    Like or Dislike: Thumb up 2 Thumb down 0

  67. rudderpedals says:

    @stonetools:

    Frankly, I’m tempted to let the conservatives get their way and let the sequester go through.

    I’m coming around to this position too. The Democrats will need to abort at conception all ideas of undoing the defense sequesters in bits at a time as Boehner’s plans states. (copy edited)

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  68. jukeboxgrad says:

    Today WP said this (link):

    The across-the-board cuts stipulated in the Budget Control Act were designed to seem so painful and foolish that their prospect, if nothing else, would force Republicans and Democrats to compromise on a measured approach to curtailing federal spending.

    What a nice example of supposedly liberal media adopting a conservative framing: that the problem is supposedly excess “federal spending.”

    The deficit is not caused by spending. It is caused by spending in excess of revenues. And right now the main cause of the deficit is low revenue, not high spending. See here (PDF):

    Receipts rose from 15.4 percent of GDP in 2011 to 15.8 percent of GDP in 2012 but remained well below the 40-year average of about 18 percent of GDP.

    Compare that statement to this statement:

    As a share of GDP, outlays fell in 2012—to 22.8 percent, which was less than the 24.1 percent recorded in 2011 and 2010 but still above the 40-year average of 21.0 percent.

    Revenue is 2.2 points below the 40-year average, while spending is only 1.8 points above the 40-year average. We have more of a revenue problem than a spending problem. But you wouldn’t know that from reading WP, because they are helping the GOP promote the idea that “curtailing federal spending” is the entirety of what needs to be done to make the budget work better.

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  69. Lit3Bolt says:

    I for one am willing to accept the consequences of these cuts.

    Once again, Doug puts the glib in glibertarian. The cuts won’t affect him, so they must be, by the libertarian definition, good.

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  70. Neil Hudelson says:

    @Jenos Idanian #13:

    The fact that you don’t understand what a debt ceiling is–nor who creates the budget and hence the deficit and debt–makes your argument kind of moot, doesn’t it?

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  71. Lit3Bolt says:

    @stonetools:

    You have much more faith and trust in the Democratic PR machine than I do.

    More likely, white Republicans will blame the darkies, and will turn out in record numbers to punish the blackity-black-blackness that has tainted their country.

    Of course, they could also blame their white forefathers for bringing the black slaves here in the first place…

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  72. Pharoah Narim says:

    @Doug: If you are willing to accept pain associated with cuts, why not accept pain associated with tax hikes. Which would be better for business? A business environment with less licenses to engage in the economy (a.k.a money) or one with less. Not much difference in a punch in the eye and one in the mouth–except a black eye heals and missing teeth don’t.

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  73. An Interested Party says:

    Let me be clear, progressives hate our children.

    Let us be even clearer…deficits have been a part of the federal budget for over 30 years but now, all of a sudden, they are going to hurt the next generation? This sudden concern of some on this issue is really quite touching…

    This is what happens when you give Obama his way. You go along with his proposal, and in the end he’ll be whining and pointing fingers and blaming you for going along with his proposal.

    Sorry sweetie, but Republicans will be blamed for this far more than the President…

    If you are willing to accept pain associated with cuts, why not accept pain associated with tax hikes. Which would be better for business?

    Remember, Doug is a libertarian…for many of them, it seems like tax hikes are always bad while spending cuts are always good…

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  74. Pharoah Narim says:

    @Tsar Nicholas: We owe 11 Trillion of that 16–to ourselves. Maybe we should put ourselves in debtors prison and @ss pound ourselves until we pay up…

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  75. socraticsilence says:

    @Tillman:

    The thing I’ve always wondered- how is the elimination of a defined benefit pension plan rather than say the phasing out of said plan over x number of years anything other than theft? I mean people like the Tsar do realize that the individuals effected likely made their career decisions based upon the existence of said plan right? That this is one of the reasons they may be working in the public sector rather than a more highly salaried private sector position?

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  76. Dane says:

    I’m so glad to have found y’all’s site I’m having a family weekend for an aunt’s birthday and need ammo to fight against repub retard uncle please tell me how much the sequester will cut our budget from last year spending And any other bullet points you might be able to give

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