POLITICS

The Spending Brownout

 

President Barack Obama on February 5, 2013. 

 

For misguided reasons of ideology and inertia, Congress seems determined to throw more than a million people out of work over the next two years. This is the price of the unnecessary spending brownout known as the sequester, and today the failure to stop it became even more inexcusable.
The Congressional Budget Office announced that all of the austerity approved in the last two years has brought the deficit down below $1 trillion for the first time in five years, ending up at $845 billion by October. And the C.B.O. made clear that fiscal tightening has come at a high cost: slow growth, a brake on hiring of new workers, and unemployment hovering close to 8 percent.
Despite that loud warning, the sequester is scheduled to go into effect at the end of this month, the first installment of which will cut $77 billion over the next seven months. The full sequester will eliminate as many as 1.4 million jobs, the C.B.O. has estimated.

The obvious solution is simply to turn off the sequester and further deficit-slashing until the economy has righted itself, but even Democrats are too afraid of the big-spender label to make that case. So today, President Obama appeared before the White House cameras with a second-best idea: delay the sequester for a few months and replace it with a mix of smaller spending cuts and revenue increases. The cuts could be targeted to minimize job losses, which would also be reduced by raising revenues and thus withdrawing fewer government dollars from the economy.
“There is no reason,” the president said, “that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn’t come together to eliminate a few special interest tax loopholes or government programs that we agree need some reform.”
During the delay, he suggested, Congress would have additional time to work out a longer-term solution to our budgetary problems.
Mr. Obama didn’t specify what kind of revenue package he was seeking, although the basic outlines have been clear for months: eliminating various corporate loopholes and deductions for some high-income taxpayers, such as the break on carried interest. Most of these revenue increases would have a minimal impact on hiring.
Republicans immediately responded that that they will not consider any new revenues as a way to reduce or delay the sequester. “The president’s proposal is nothing more than another tax hike to pay for more Washington spending,” said Dave Camp of Michigan, chairman of the House Ways and Means Committee.
The spending cuts were designed to goad them into accepting a balanced approach in order to avert the big cuts to the defense budget, which used to be one of the highest priorities for an earlier generation of party members. But younger Republicans don’t seem to care about fewer fighter jets or naval bases; they want their spending cuts however they can get them, untarnished by revenue increases. Barring a breakthrough, it looks like their wish will come true in less than a month.