Blame Game Looms Over American Economy


Zbigniew Bzdake


Obama visits Chicago
Obama’s offer for a sequester may be a better option than his plan to raise taxes and cut funding for hospitals, but it is ultimately an unfair scare tactic for Congress Republicans. (Zbigniew Bzdake/Chicago Tribune/MCT)

The word ‘sequestration’ sounds scary, full of hisses and sharp, unvoiced consonants. But what is sequestration, really?  Why is everyone so afraid of it? Sequestration began as yet another opportunity for blame-happy politicians (read: the Obama Administration) to make the other side look bad. But it’s turned into a tide of poor planning that makes the United States look foolish.

Consider the facts. The sequester, poised to go into effect this Friday, is a group of cuts amounting to $85 billion in federal spending. According to The New York Times, the cuts would save $1 trillion in government spending over the next ten years. Unlike most of President Obama’s policies, these cuts would make a dent–albeit a small one–in the United States’ almost $17 trillion debt as estimated by the U.S. National Debt Clock. Many of the spending reductions would hit the defense budget, while others would affect Medicare and Head Start, the federal pre-kindergarten program. Additionally, some federal employees will be laid off or asked to take some unpaid time away from work. The sequester leaves many federal entitlements as they are: social security, Medicaid, food stamps programs, veterans’ and active-duty military personnel benefits, refundable tax credits and children’s health programs would remain unaffected.

These proposed cuts, despite their unbecoming name, would not plunge the United States back into a recession. The New York Times reports that they would lower Gross Domestic Product (GDP) by approximately half a percent, but that’s because they reduce government spending, which is calculated as part of GDP. A few spending cuts, I hope, may  introduce some discipline to a government that’s just as irresponsible (if not more so) with cheap credit as its citizens are. The sequester, though somewhat poorly structured and insufficient, would actually move the USA in the right direction. The Republicans are right in stalling a compromise: the sequester wouldn’t be so bad.

But who came up with these “automatic” spending cuts, as Obama called them? The answer: Jack Lew and Rob Nabors, former White House chief of staff and current deputy chief of staff for policy, respectively. These two White House budget experts invented the sequester and suggested it to the President, and on July 27, 2011, Obama personally approved the plan. I guess I’ve learned that “automatic” is a synonym for “personally put in place by the President.”

The cuts, the President says, “will slow our economy.  They will eliminate good jobs. They will leave many families who are already stretched to the limit scrambling.” Obama, who suggested the sequester in the first place, is using it to scare the American people and manipulate Congress Republicans into doing anything he says to avoid the cuts.

Obama has begged Congress Republicans to make “just a little compromise” to ensure that his creation, sequestration, doesn’t happen. Here’s the problem: that “little compromise” involves implementing Obama’s alternative plan, which raises taxes and cuts spending in ways that will affect hospitals (the details of the plan appear on the White House website). Congress already raised taxes to dodge the Fiscal Cliff; Congress Republicans, rightly, don’t want to raise them again. When he implemented the sequestration policy, Obama wanted to use the threat of defense cuts to force Republicans to compromise with Democrats, but he didn’t realize that Republicans might not complain too much about a rational, though incomplete, move toward smaller government.

In fact, whether the sequester helps the economy or not, Republicans who want to play politics correctly should let it happen. If the cuts cause economic hiccups, Republicans can blame Obama for the sequester’s conception. On the other hand, if the cuts help steer the economy in the right direction, Republicans can say, “I told you so,” and ask for more.

Unfortunately, I think the sequestration panic has spread too far for Republicans to easily allow it to happen without significant political uproar. As a result, I think that we’ll see more congressional delays this Friday, a la Fiscal Cliff. Once again, Congress will procrastinate on making a decision and fail to lead the United States constructively, and Obama will have to cook up some other way to manipulate Congress into working together. But if the sequester does happen, as I would like it to, maybe Obama will learn to stop trying to push Republicans into a corner. Maybe he’ll propose a genuinely constructive budget plan, not a thinly veiled tax hike that only pretends to fix the debt.