Sequester Stupidity
As the nation lunges ever-closer to the edge of another artificial crisis with the March 1 realization of the previously unthinkable "sequester", a particularly childish argument is ensuing about who is responsible for it rather than invocation of adult solutions or compromises. Unfortunately, I'm gonna have to confess that in this pointless blame game, President Obama is probably most complicit, indirectly, because it's just another example of him having underestimated the extent to which Congressional Republicans have become 200+ Lex Luthors, plotting to destroy their own country.
In the final throes of the debt ceiling debate in the summer of 2011, with the country only days (and possibly even hours) away from a default that would have triggered a global depression, the Obama administration came up with the "sequester" as a way of convincing House Republicans to kick the can on a spending fight and pass a debt ceiling increase. By making reckless military spending cuts a key component of the sequester, the Obama team figured Republicans would have no choice but to bargain in good faith when the time arrived, as they would never be willing to allow such damaging cuts to their sacred cow of defense spending bloat. I think everybody is a little bit surprised as we approach March 1 to see that Republicans ARE willing to savage their own military base if it means taking away some of Obama's political capital.
Unfortunately, it appears there are two types of Republicans in Washington right now, and both types are equally harmful to the country. The first type of harmful Republicans are the true believers, those who think government spending of any kind is an unqualified drag on the economy and the budget, and that only good can come from any pound of flesh they can slice off the "Leviathan". This would be the Tea Party types, driven by ignorance and ideology more than simple partisan gamesmanship, and thus supportive of riding off the sequester cliff. The second group is the GOP leadership--the Mitch McConnell types--who have a better understanding of the connection between government spending and the state of an economic recovery when private sector growth is lagging, but are still willing to let the country deal with the fallout of a haphazard, frontloaded cut in federal spending simply because they think doing so will weaken the President and help their fraternity's chances of reclaiming the victory trophy in the next election.
And politically, the calculation by the Republicans could play out shrewdly on this one. Unlike the previous artificial deadlines, it seems both Obama and the public are too exhausted to care that much about this one, even though the consequences of letting it pass will be not insignificant. The debt ceiling and New Year's tax hike deadlines would have had abrupt consequences on the public felt by nearly everyone, but the sequester will have a slower drip-drip effect in which the pain will not be broadly felt in the near term. This allows Republicans to take credit for the cuts in spending but then blame Obama for the lack of economic recovery that plays out over the next two years largely as a consequence of the spending cuts. And the case to counter this will be pretty complicated for Obama and the Democrats to sell to the public.
And for all the unnecessary extraction of resources our economy so desperately needs that will occur as a result of this sequester, it's effect on our deficit will be infinitesimal. It might even grow the deficit since the reduced economic activity that will come as a consequence from the sequester's fallout may reduce tax revenues. As is frequently cited, the real growth in our deficit long-term will be the result of entitlements, which will not be touched as part of the sequester. More specifically, the growth will be the result of America's uniquely dysfunctional and prohibitively expensive health care delivery system. Obama reportedly went so far as to counter Speaker Boehner's claim of the nation's "spending problem" by saying "we don't have a spending problem....we have a health care problem." This is a relatively astute observation, but the administration's stated solutions to our health care spending problem don't fill me with confidence about its seriousness to bring those costs down.....
First, ObamaCare kept the basic structure of the existing health care delivery system intact. Doing so was necessary to keep enough special interests onboard to pass the thing, but I actually agree with Paul Ryan's comment regarding ObamaCare's stated intention of reducing health care spending.....that if ObamaCare reduces the deficit, "I will eat my tie". Second, Obama is on record in being willing to raise the eligibility age for Social Security and Medicare to 67 as part of a "grand bargain" in dealing with Republicans. This suggests to me that Obama doesn't have a very serious grasp on what's driving health care costs in the country. It isn't 65-year-olds bankrupting Medicare....it's 85-year-olds. And third, the administration's front-and-center push to control health care spending involves the usual suspects.....pretending that smoking and obesity are responsible for higher costs rather than lower costs, again confirming that they don't understand how health care spending works.
In truth, we can narrow Obama's comment to Boehner of having a "health care problem" as it relates to our deficit even further. We have an "old people living longer" problem. Sensible countries address this issue by rationing health care outlays. In America, we're not even talking about it, instead pretending that our deficit issues will go away if fewer people eat cheeseburgers or if a few federal workers lose their jobs. It's too soon to tell how severe the pain will be that the country endures as a consequence of the sequester, but it's safe to say that whatever level of pain we endure, it will be for absolutely zero benefit as it pertains to spending reduction and deficit control.
In the final throes of the debt ceiling debate in the summer of 2011, with the country only days (and possibly even hours) away from a default that would have triggered a global depression, the Obama administration came up with the "sequester" as a way of convincing House Republicans to kick the can on a spending fight and pass a debt ceiling increase. By making reckless military spending cuts a key component of the sequester, the Obama team figured Republicans would have no choice but to bargain in good faith when the time arrived, as they would never be willing to allow such damaging cuts to their sacred cow of defense spending bloat. I think everybody is a little bit surprised as we approach March 1 to see that Republicans ARE willing to savage their own military base if it means taking away some of Obama's political capital.
Unfortunately, it appears there are two types of Republicans in Washington right now, and both types are equally harmful to the country. The first type of harmful Republicans are the true believers, those who think government spending of any kind is an unqualified drag on the economy and the budget, and that only good can come from any pound of flesh they can slice off the "Leviathan". This would be the Tea Party types, driven by ignorance and ideology more than simple partisan gamesmanship, and thus supportive of riding off the sequester cliff. The second group is the GOP leadership--the Mitch McConnell types--who have a better understanding of the connection between government spending and the state of an economic recovery when private sector growth is lagging, but are still willing to let the country deal with the fallout of a haphazard, frontloaded cut in federal spending simply because they think doing so will weaken the President and help their fraternity's chances of reclaiming the victory trophy in the next election.
And politically, the calculation by the Republicans could play out shrewdly on this one. Unlike the previous artificial deadlines, it seems both Obama and the public are too exhausted to care that much about this one, even though the consequences of letting it pass will be not insignificant. The debt ceiling and New Year's tax hike deadlines would have had abrupt consequences on the public felt by nearly everyone, but the sequester will have a slower drip-drip effect in which the pain will not be broadly felt in the near term. This allows Republicans to take credit for the cuts in spending but then blame Obama for the lack of economic recovery that plays out over the next two years largely as a consequence of the spending cuts. And the case to counter this will be pretty complicated for Obama and the Democrats to sell to the public.
And for all the unnecessary extraction of resources our economy so desperately needs that will occur as a result of this sequester, it's effect on our deficit will be infinitesimal. It might even grow the deficit since the reduced economic activity that will come as a consequence from the sequester's fallout may reduce tax revenues. As is frequently cited, the real growth in our deficit long-term will be the result of entitlements, which will not be touched as part of the sequester. More specifically, the growth will be the result of America's uniquely dysfunctional and prohibitively expensive health care delivery system. Obama reportedly went so far as to counter Speaker Boehner's claim of the nation's "spending problem" by saying "we don't have a spending problem....we have a health care problem." This is a relatively astute observation, but the administration's stated solutions to our health care spending problem don't fill me with confidence about its seriousness to bring those costs down.....
First, ObamaCare kept the basic structure of the existing health care delivery system intact. Doing so was necessary to keep enough special interests onboard to pass the thing, but I actually agree with Paul Ryan's comment regarding ObamaCare's stated intention of reducing health care spending.....that if ObamaCare reduces the deficit, "I will eat my tie". Second, Obama is on record in being willing to raise the eligibility age for Social Security and Medicare to 67 as part of a "grand bargain" in dealing with Republicans. This suggests to me that Obama doesn't have a very serious grasp on what's driving health care costs in the country. It isn't 65-year-olds bankrupting Medicare....it's 85-year-olds. And third, the administration's front-and-center push to control health care spending involves the usual suspects.....pretending that smoking and obesity are responsible for higher costs rather than lower costs, again confirming that they don't understand how health care spending works.
In truth, we can narrow Obama's comment to Boehner of having a "health care problem" as it relates to our deficit even further. We have an "old people living longer" problem. Sensible countries address this issue by rationing health care outlays. In America, we're not even talking about it, instead pretending that our deficit issues will go away if fewer people eat cheeseburgers or if a few federal workers lose their jobs. It's too soon to tell how severe the pain will be that the country endures as a consequence of the sequester, but it's safe to say that whatever level of pain we endure, it will be for absolutely zero benefit as it pertains to spending reduction and deficit control.
posted by Mark at 1:32 PM
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