Via Reihan Salam, Jed Graham argues that the labor market faces some serious downside risks in the coming year as a result of Obamacare regulations and taxes coming on line in the while the economy remains fragile. Graham believes that the cuts in the sequester would allow Obama to blame the lousy labor market on the reckless meat cleaver cuts of the sequester (not my characterization but that is what you will hear) instead of Obamacare. I think this gets to several problems with the sequester.
First, even though it was suggested by the Obama administration, the sequester was really a compromise between Republicans. Republican House leaders were facing a losing public relations fight with the White House over the debt ceiling that would have gotten far worse if the government had begun to default on some if its obligations. Meanwhile, many backbench House members were unwilling to go along with any deal that only made small cuts in spending. The sequester allowed the Republican leadership to back out of the debt ceiling fight while backbenchers could posture that they had cut spending by $1.2 trillion in some to-be-determined way. Republicans didn’t support the sequester because it was good policy. They supported it because the sequester let them live with each other for a while. They hoped that Romney would be elected president and make the sequester pointless. Well, Obama won the presidential election and here we are.
Second, the sequester was designed to be nonsense. That was the whole point. It would allow Republicans to technically vote for budget cuts while structuring the future cuts so irrationally that the Congress would either have to switch to different kinds of cuts (what Republicans would have hoped for) or no cuts (what Democrats would have hoped for.) The Democrats seem to have a better sense of the long-term politics of the sequester. Of course they do. The sequester was a Democratic idea designed to manipulate Republicans who were too busy maneuvering against each other to come up with coherent strategy to oppose the Democrats.
Third, the sequester allows Obama to give spending cuts a bad name. This is what Byron York and the Republican governors have figured out. The sequester incentivizes bad Democratic behavior. The more incompetently and painfully Obama implements the sequester, the worse spending cuts seem as an idea and Republicans are at fault for every inconvenience. Republicans in Congress would have seen this coming if they had been thinking past the next day’s headlines in their district, and the next meeting of the House Republican caucus.
What is the endgame here? If the sequester happens, the most likely scenario (as I see it) is that public pressure will result in some House Republicans allying with the House Democrats and a large majority in the Senate to restore the cuts after some face saving compromise that doesn’t save the Republicans much face. This would leave the Republicans more divided, more demoralized, and (ironically) more determined to jump into the next trap Obama sets up for them. They will call for the House leadership to show “backbone” and “do something” – even if that something is counterproductive. Their frustration, short-sightedness, and despair won’t let them learn from their mistakes until they learn that frustration, short-sightedness, and despair are what got them into this mess in the first place.
What are the Republicans to do? Absent a collapse in the market for US Treasuries, Republicans are going to have to win elections on a program of government reform and spending restraint. I know the Republicans have a majority in the House of Representatives. That is an artifact of gerrymandering and residential patterns. The Republicans lost the popular vote for the House of Representatives by over 1.3 million votes. The Republicans lost the presidential election by just under five million votes. The Republicans lost twenty-five of the thirty-three Senate races. Republicans haven’t convinced the public and this gives the Democrats a winning hand – and the Democrats know it. First win the argument. The sequester confrontation is just getting in the way.
February 26th, 2013 | 9:10 pm
Very expert post. You’ve covered it all in an appropriately depressing way.
February 26th, 2013 | 9:20 pm
Yes, and “They hoped that Romney would be elected president and make the sequester pointless. Well, Obama won the presidential election and here we are.” just sums it up.
February 27th, 2013 | 12:25 am
“Many simultaneous rebellions stirred up in Arab Countries will benefit in the end only the State of Israel with the expansion of its territory
while…
in Europe and in the US, the financial resources “like magic” will disappear through bailouts, tax cuts and elaborated emergency maneuvers which will be ruled only to appear beneficial for those Countries but instead appositely designed for their collapse (except for England that will push Europe over the precipice).
It is closer than you think
The old economy will get to the last stop.
The internet instead will have its plug pulled
Massive poverty will bring chaos and anarchy while the lack of effective governments will set the stage for one World Tyranny
It will be just from chaos that one voice will rise with the promise to fix all and everyone.
That will be the forked tongue of the New World Order”
There is only one Solution for this planned chain of events.
http://www.wavevolution.org/en/index.html
February 27th, 2013 | 6:09 am
What Lawler? Still praising Pete on Finance?
The sequester is a bad idea, and the entire deficit hawk position is unsustainable. Glad to see you all agree that Obama has been on your side all along, and there hasn’t been anything close to a robust argument given as how the left and right are both united around a false facts consensus.
The right and the left was just too wrapped up in a sort of argument that I could prove had to be wrong in several ways as a fallacy of composition. In my opinion it comes from getting key leadership from the state level where for Governors the deficit hawk and ballanced budget finances is the very halmark of being reasonable. But the difference between state finance and national finance is night and day. It very much matters if one entity is monetarily sovereign.
I was saying everything Paul Krugman is saying now back in 2009. But this was something I had to think about long before this in part because the issue has key implications for federalism. It is also why I opposed Ohio labor law changes in the midst of a recession. (negotiating power is almost nil.) So for me and perhaps for others in Public Sector Labor law we have believed that federal employees are somewhat more priveledged in terms of negotiating leverage. (That is there is more overpaying and “inneficiency” in federal public sector labor law than State…but even this isn’t on the level of the incredible inballance in agent-principal relations that exists in some small mid cap corporations (too small for big money hedge funds or basically anyone to pay much attention to the board of directors.)
So needless to say the U.S. Government is not like a corporation… it is not like a state government. Also a collapse in the market for treasuries can’t happen (absent very good things for the economy)…(in the short-medium run). The market for treasuries is almost completly controlled by the Fed. (not by China or anyone else).
The policy shock of ObamaCare might actually be a net drag of the economy(good for harvard law and legal/constitutional challanges…and the shenanigans of federalism in modifying it for state law kosherness.) …but it isn’t an easy analytical proposition like taxes (which drain money out of the economy)…or spending cuts from the sequester (which also drain money out of the economy.)
In a sort of micro-theory…there should be a way to do the spending cuts from the sequester in a way that more or less duplicates the sorts of “natural” (i.e. within the framework of monetary non-sovereignty) ballance that occurs at the state level. That is I remain firm in the conviction that Ohio public sector labor law is very fair and ballanced (no on SB 5). But that the federal government since it is the anti-cyclical juggernaut/leviathan, does not really shed jobs or freeze pay in the same way.(always a semi-favorable pay negotiation environment.)
That is in terms of labor law…if you have to be against unions (which I suppose is some sort of ideological litmus test)… then the sequester is a good time to sort of put the negotiating pressure on. So there is a sort of public policy, public sector labor law distinction you could avail yourself of if you chose to bi-furcate the issue a bit.
I for one don’t think there is really a problem with the inflated wages of the working man (i.e. folks who statutorily make less than the president). Still it is more probable that workers are overpaid at the federal level than it is at the state level. A sequester is hypothetically a sort of a policy tool that cannot be used at the height of a recession, when Keynesian policy is most needed…and so comes in as a check upon wages somewhere around this point in time… Of course in fact the wages of government workers haven’t really skyrocketed under obama…in some cases sequester cuts will eliminate the entire budget growth in departments.
But the problem with the sequester is that it isn’t narrowly tailored enough and it remains bad Macroeconomic policy at this point in time (microeconomics be damned).
So the sequester is still smarter on the part of the Republicans as a matter of public policy concerning public sector labor unions, than SB-5 was in ohio (then Ohio was already shedding state jobs like crazy…because it is not monetarily sovereign). But Jed Graham is still right that it is “bad” Macroeconomics(which is really a sort of timming issue.)
A sequester can be good in theory…to correct for the imballance in public sector labor law between employees subject to cyclical movements(state), and those who are not (federal).
For what it is worth I am uncertain about these economic claims concerning ObamaCare… I think they are a bit too much of a foil for keeping wages in general suppressed. (I can’t give you a raise…ObamaCare is costing me a fortune! Then again when is gov. policy not going to be a scapegoat tool in the manager toolbox?)
But the main reason it is bad Macro…is that right now the consumer’s marginal propensity to save is a lot higher than his capacity to save… Consumer spending is still fairly weak… In order for the consumer as an aggregate to save, government must spend.
So it is really bad Macro (especially given Wal-Mart’s numbers as a good signal).
I say pair the sequester back to 200 Billion over 10 years, and put the president on the defensive with an unforseen request that he use his “magic” scapel to bring a semblance of parity to the financial expectionalism of the federal government over the states as it manifests itself in public sector labor law. Certainly there are some SEC investigators who have been watching too much porn and some generals who have been having affairs…
The problem with any of these cuts in my opinion is that I do think the government is more productive…(I am uncertain on the efficiency question)than republican rhetoric… so basically we are deciding to do less work…produce less on the government end…and have less money entering into the economy…where it would help buy/soak up inventory and stimulate the economy.
I am not 100% sure that anyone will notice (but the unseen part of this will just be more backlog..)
I am stuck in a sort depressing Macro-outlook where I don’t want either the republicans or the democrats to win…because they both seem out of step with the economic times. I don’t want the democrats to get tax raises, and I don’t want republicans to get spending cuts.
February 27th, 2013 | 7:59 am
John, your greatest fear is baseless. I am quoting Phil Gramm from this morning’s WSJ, “Even after the sequester, the federal government will spend $15 billion more than it did last year, and 30% more than it spent in 2007. Government spending on nondefense discretionary programs will be 19.2% higher and spending on defense will be 13.8% higher than it was in 2007.”
Still plenty of government spending going on.
February 27th, 2013 | 8:37 am
This morning I can’t decide if Pete isn’t right, or if his isn’t the voice leading us to the well of rhetoric-science poison. The sociology of common opinion dynamics for low-information voters. A science that insinuates its way into the soul, that turns YOU into your supposedly “together” and “professional” rhetoric.
Bottom-line is, as Kate said a few days ago, Obama lied on this. It was his proposal, nor was it some masterstroke, but the result of fumbling for any old thing. Little evidence from Woodward to suggest it was some brilliant “trap.”
And the decision for Republicans to stand by the Obama-sequester deal or not was made two or three weeks ago? Where was Pete’s voice then? And he knows a decision to wobble on it would have some consequences with a) the Republican base, and major consequences with b) Republican credibility in the next round of negociation.
Part of that credibility is unity. Obama needs to know few will budge.
And the endgame here is longer than the next few months…caving on this makes the long-term endgame worse. Why is that all the modern democracies, Britain, France, Japan, Italy, etc. are currently paralyzed from taking meaningful budget trimming? It’s because the “trap” comes not from leftist masterminds, but from the dynamics of the whole system. Dynamics you exascerbate when you give into them in advance.
So Pete, I’ll go read the Byron York now, but I think I have decided: the audacity of common sense requires Republicans to say no to this kind of Pete-advice. (Which is, anyhow, advice for what? Give up on holding the Pres to his deal now, because you will have to anyhow in three months, right?)
February 27th, 2013 | 8:57 am
And in fact, while the York article makes it plain that there is great fear that Repubs get blamed for this, that scenario does not in itself translate into governors feeling greater political pressure to not discipline their own budgets, which I read Pete as suggesting. Sure the article shows some understandable distancing from the House being practiced by some Rebup governors, of the “DC crazy, I balance budgets, P.S. Obama’s the Craziest” variety, but it also makes it plain that the other fear in the air, and that should be more in the air, is one about Obama–if you keep letting him break deals and control the debate with such transparent manipulation (Jindal whines, for example, about the press knowing about the state-relevant cuts before the governors did), where will he stop?
February 27th, 2013 | 9:37 am
1. There’s really no way for Obama & the Dems to wriggle out of the impending Obamacare debacle. When your employer starts dumping your health insurance and/or cutting your hours, how can that possibly be blamed on the sequester (BOO!)? It can’t.
2. “We” need an alternative word to “austerity” to indicate the objective of barely reining in government spending. First, as Kate points out, there’s absolutely nothing “austere” going on. There aren’t even any real cuts! Second, “austerity” sounds harsh. Even “frugality” isn’t quite right. Someone needs to find a word.
3. I have no advice for the GOP. Even their “harsh” and “brutal” plans don’t even come close to averting the imminent financial disasters. I don’t think the American public is quite as insane as folks in Greece, Italy, etc., but I’m probably at least mostly wrong about that.
February 27th, 2013 | 9:40 am
Carl, I was thinking it through. It is an advantage I have as an observer rather than a participant of course, but that hasn’t stopped Obama from thinking ahead. The caving on this is a matter of when not if I fear and the governors probably know it and the longer it is drawn out the worse the politics of fiscal consolidation gets. There is a reason why Obama wants to fight on this ground. For me, I would focus on introducing policy alternatives to obamacare, family friendly tax reform, and pointing out the negative impact of obamacare. The Republicans have a good base from which to block Obama proposals, but they lack the institutional and popular base to impose their spending priorities. They have to win more elections to do that.
February 27th, 2013 | 10:23 am
In the first comment, I meant “The decision for Republicans to stand by the Obama-sequester deal or not was made two or three weeks ago.” No question mark. A period.
February 27th, 2013 | 1:15 pm
This is all too painfully true and the argument can be made in many ways. However, the underlying basis for its veracity is never stated. Sadly the real basis for it is that the American electorate is so issue-ignorant (strong words perhaps) that it fails to realize what discipline and policies are needed to extricate us from our present bad situation. Given the choice between Candyland and Santa or character-building discipline and a drill sergeant to instill it, the American people will, sadly, choose Santa every time.
February 27th, 2013 | 1:56 pm
Or……….
1.) The public will conclude that all this doomsday talk will have been all growl and no bear.
Or……..
2.) The public will sink into one funky despair when it comes about that Obama and the rest of the government can’t possibly no way no how get by with a cut 47 percent the size of the AIG bailout.
February 27th, 2013 | 4:34 pm
Brian, Why not use the good, old-fashioned word “retrenchment” instead of austerity and frugality? And for good measure, why not “retrenchment AND reform?”
But then the other side could call itself the party of “relief.”
So I’m not sure that that distinction would reframe the understanding of the issue any better. I don’t think this issue can be finessed any better than it already is.
February 27th, 2013 | 4:58 pm
Carl, more time now.
“And the endgame here is longer than the next few months…caving on this makes the long-term endgame worse.”
That is only true if there is no learning from this experience and the next confrontation is just like this one. Focusing on how particular Republican policies will be better than particular Democratic policies will not result in large immediate cuts, but could lay the groundwork for future Republican wins and make those wins more fruitful when they happen.
“And he knows a decision to wobble on it would have some consequences with a) the Republican base, and major consequences with b) Republican credibility in the next round of negotiation.”
I don’t know that it would play out this way, but it could turn into a chance for Republican congressional leaders and activists to talk turkey to each other and get past this toxic situation where Republican leaders treat conservatives like violent tempered fanatics who need to be gulled into going along and activists call Republican congressional leaders weenies when the House Republican leadership can’t win these fights against Obama.
I think the conversation could start with something like:
“We (congressional leaders) picked a bad strategy and you (the activists) backed us. There is blame to go around. We don’t need to argue about how we would do better next time if we executed this strategy with more skill or more “determined” leadership. We need a new strategy. Nobody had the total answer for what it should be. We need to work on it together.”
“It’s because the “trap” comes not from leftist masterminds, but from the dynamics of the whole system. Dynamics you exacerbate when you give into them in advance.”
The trap is that Republicans have worked themselves into a situation where they are defending a policy designed by their opponent – and which was designed to be a bad policy. Being bad policy was the whole point of the sequester. That was the stick. If the Republicans need to stick together on this to maintain to maintain “unity” and “credibility”, then they need to rethink how they got into this situation and start picking fights where united credibility would do them more good.
“The decision for Republicans to stand by the Obama-sequester deal or not was made two or three weeks ago.” The politics of this is muddled so I don’t know how a straight repeal of the sequester would do in the Senate even if the House passed it (which is not in the cards yet.) I like Jed Graham’s in the article Salam links to.
“that scenario does not in itself translate into governors feeling greater political pressure to not discipline their own budgets, which I read Pete as suggesting.” My read (and I could have been more explicit) was that the Republican governors recognized that the politics of the sequester were bad for the GOP at the federal level – not that it would force Republican governors to raise taxes and/or spending in their own budgets.
February 27th, 2013 | 11:12 pm
pete, thanks so much…I’m going to say a bit here, but I do suspect the next few days won’t allow me to respond again.
I think your best point is about picking fights, choosing the terrain to defend, and saving your “unity” efforts for those moments.
But I wonder…what if no such terrain emerges? Politicians try to create frame the main events of politics to their advantage, but some events are just things that happen. And responsibility means responding to events, whether they serve you or not.
Our event here? Obama and the Rs made a particular deal, that implied willingness to compromise on cuts between then and now. He now wants to avoid all responsibility for it and to pin all the blame, on the Rs. Unless they just cave, and let the budget grow some more. Again, I do not think this was grand Obama strategy, but more likely his bumbling around and then relying on the usual BS to see him through. So the House is forced by events themselves to either say, we’re cornered by his demagoguery, and give in this time, or, to take a stand.
Will the next “stand point” on budgetary affairs also be favorable rhetorical terrain? How do we know it will be?
And BTW, every sane conservative is in a very Meninius-like “the masses are asses” mood these days, for good reason, but there’s a danger there. The danger is that we try to become all expert about the public ass-ery, learning what the beast wants, or just affirm some kind of Murphy’s Law against political sanity, and either way wind up with something like the “bigotry of low expectations.” Toward our nation. Toward our fellow citizens. Do we really want to be in the position of later trying to explain to non-conservatives that the reason we gave in on the sequester was because we felt the issue was too complex for you and yours?
Lose this fight, at least the Rs will be on record as having made one. That will give the public less reason to despair on all politics if the second financial meltdown does come.
You see, a certain bottom-line faith in Deliberative Democracy (see Joseph Bessette), of the truth eventually outing, has got to remain the conservative calling card. (Not to mention loyalty to the Constitution.)
Otherwise, its time to try to reason–behind closed doors–why Tocqueville was wrong that we cannot return to aristocracy. If the American people cannot be brought around to see what’s what about Obama’s demagoguery, let us say even in the wake of another financial collapse, then the Founders were wrong. Aristotle, too. About the whole justification for popular suffrage.
I just want to point out what the really low expectations logically imply. They imply being forced for the sake of crumbs becoming like Frum, or seriously taking up the long march against democracy.
February 28th, 2013 | 10:06 am
John: “Retrenchment” means nothing. At least when the left picked “austerity” as the thing to be opposed to, it had emotional resonance with people, especially in Europe. Never mind that nothing in the same galaxy as “austerity” has actually happened–the left was against it, darn it, and they say the right is for it. I don’t know the best approach for “the right” is, but picking some reasonable language is important.
Carl: Don’t think the “Let It Burn” folks don’t care. When there’s no avoiding the calamity, it makes the choice of course of action very easy–just do the right thing. Try to be as persuasive as you can be, but don’t worry overly about popularity at the expense of truth. Salesmanship is the top priority only when nothing much is at stake. Think Churchill in the 1930s. The people will come around, or they won’t. If the former, you’ll be there to lead the way. If the latter, we’re all hosed anyway and it won’t make a difference.
February 28th, 2013 | 3:13 pm
Carl,
You are brave to spell out, at the end of your last comment, the implications of our current situation for the viability of republican (in the classical sense) government. For your sake, I hope the leftist do not read this site.
You suggest that we should reconsider whether Tocqueville was correct in saying that a return to aristocracy is impossible. In fact, it seems that the Left does want its own form of aristocratic rule (behind a facade of “popular sovereignty”), but one in which the ruling aristocracy denounces and actively opposes virtue and prudence.
February 28th, 2013 | 3:22 pm
In my previous comment, the last sentence of the first paragraph should have read: “For your sake, I hope the leftist thought police do not read this site.”
February 28th, 2013 | 5:12 pm
Carl, Your second to last paragraph brought to mind Willmoore Kendall’s 1965 essay “How to Read Richard Weaver: Philosopher of ‘We the (Virtuous) People.’”
I know you only raised this idea as a last thought, and that you wish to stand up now (against caving to the president), rather than later being impelled to take up the course of the long march against democracy. I do too, but I nonetheless thought I’d pass along this fascinating quote which was not written from behind closed doors in The Intercollegiate Review (which is probably why though it is out in the open, it’s not remembered today by the leftist though police, except perhaps as the outdated thoughts of a cranky conservative professor).
I don’t think the current situation is as dire as this, but perhaps I’m deluded. I don’t really think Kendall’s idea is possible today anyway. Still here’s the quote–
“How shall the people be kept virtuous? Weaver answers…only through a self-chosen ‘select minority’ who assume responsibility for a people’s culture, in which its virtue must be rooted–for, therefore, understanding what needs a culture must satisfy if the people are to adopt it and live it as their own, for, therefore keeping alive and healthy a culture that will satisfy those needs, and for disseminating it among the several members of the people, each according to his capacity for receiving it. It must, as part of the culture it disseminates, teach the people those lessons that the people must learn if they are to operate a society in which a sound and healthy culture is possible.”
February 28th, 2013 | 7:58 pm
Carl,
“I think your best point is about picking fights, choosing the terrain to defend, and saving your “unity” efforts for those moments.
But I wonder…what if no such terrain emerges? Politicians try to create frame the main events of politics to their advantage, but some events are just things that happen. And responsibility means responding to events, whether they serve you or not.”
I think this lets the Republicans off the hook a bit for how they got into this mess. The sequester was a mechanism suggested by their opponents when the Republicans found themselves unwilling to bring things to a general ruin in the debt ceiling controversy of Summer 2011. So you have one ill-chosen fight over what they know is not a good policy that was produced by an earlier ill-chosen fight. We have recursion. The Republicans could start by not letting themselves get suckered.
I agree that you can’t pick all your fights which is why I favored a filibuster of Hagel (for whatever benefit might be gotten from a somewhat better Obama-nominated Defense Secretary.)
“Lose this fight, at least the Rs will be on record as having made one. That will give the public less reason to despair on all politics if the second financial meltdown does come.”
I don’t see that this plays at all one way or another if there is a financial crisis. Graham points at the possibility that Obama might be able to blame the Republicans on the sequester and use it to deflect blame away from Obamacare created weaknesses in the labor market. Maybe it doesn’t work out that way, but it doesn’t strike me as impossible.
“And BTW, every sane conservative is in a very Meninius-like “the masses are asses” mood these days, for good reason, but there’s a danger there.”
I don’t think that, but I do think that minds change very slowly and that it is a slog every step of the way in the early stages.
“Will the next “stand point” on budgetary affairs also be favorable rhetorical terrain”
We can’t know, and Christianity and Strauss both point away from the idea that man can control his fate on his own. But that is no excuse for not preparing the ground as best we can. The more Republicans can publicize better policies the better prepared they will be to seize whatever opportunities come up (which will be unpredictable in timing and/or form.) Some conservative activists have already begun the process of blowing it on health care policy. http://washingtonexaminer.com/philip-klein-cpac-emblematic-of-why-conservatives-lost-health-care-debate/article/2522749 I see one panel on Benghazi and zero panels dedicated to health care policy. http://conservative.org/cpac/2013/# Maybe I missed it but I checked the schedule of events twice.
“You see, a certain bottom-line faith in Deliberative Democracy (see Joseph Bessette), of the truth eventually outing, has got to remain the conservative calling card. (Not to mention loyalty to the Constitution.)”
That is exactly why I think they should focus more on promoting good policies instead of defending bad (though-not-the-worst-thing-in-the-world) policies just because they precommitted to them.
March 1st, 2013 | 5:34 am
Yeah, Pete, you are a true deliberative democracy guy to the core, and I salute you for it. You’re about making the policy argument better, and more widely understood.
So I guess my core point is that it looks like we confuse lo-info voters as much by giving up the sequester fight as we dismay them short-term by sticking with it. If we really are up against a dynamic where we’ll be forced to give up, then by all means give up now, but I don’t see that.
djf, I surely have Coriolanus on the brain too much–the aristocracy they want is one of tribunes. Dinner in the fine patrician restuarant at night, legal-work in the morning, rabble-rousing in the afternoon. You’ll have to go to Yale to get into the best Community Organizing firms. P.S. I very very seldom think Tocqueville and Aristotle are wrong about anything.
March 1st, 2013 | 11:00 pm
Carl, my sense is that low info voters are not currently in a place where they could explain what the sequester is if the fate of the Earth depended on the answer. The biggest problem would be between different groups on the center-right. But it would also be an opportunity for some overdue conversations.
March 2nd, 2013 | 8:00 am
I must say that I think Peter is quite correct. And Obama is likely to win the next fight as well, over the debt ceiling. Why? Because the retreat of Boherner from direct negotiations with Obama has left that party without a single newsworthy spokesperson for their point of view. The president is always, and by definition, newsworthy with plenty to say about the Democratic POV.
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