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.