Sequester – Now What?

If you’re like me and think that the economy neither needs, nor can stomach, government spending cuts reading the media frenzy over the sequester has a distinctly surrealistic air. What on earth are we to make of the entire episode?

Instead of substantial analysis all we seem to get from the media is a stream of he-said, she-said articles laying the ‘blame’ alternately on Obama and then on various Republicans.

Actually none of this is really difficult.

Let’s not fall into the most common trap: the blame is not to be allocated equally. Take, for example, Bill Keller’s terrible op-ed in this morning’s New York Times. The headline is all we need to read:Obama’s Fault. That settles it then. Apparently it’s Obama’s fault.

What is Obama’s fault?

The sequester cuts and the damage they are doing.

Recall how we arrived at the sequester farce: the Republicans were holding the economy to ransom. In 2011 Obama was negotiating with Congress in order to get the debt ceiling raised. The right wing of the GOP didn’t want any such thing and argued that any increase in the debt ceiling ought to bring with it an equivalent set of budget cuts. This sounds reasonable to the average person unaware that this ties together two unequal issues. The debt ceiling relates to past spending. The debt is to pay for things Congress already agreed to do. Some of those things were set in motion during the Bush administration. So not raising the debt ceiling to pay for those things is tantamount to throwing a hissy fit when you realize how much the stuff you just bought actually costs. Tough. You bought it, now pay for it.

Well: to pay for all the stuff Congress wants to buy we can [a] raise taxes; [b] print money; or [c] borrow money. That’s it. Since Congress doesn’t seem to want to raise taxes to pay for what it wants to spend; and no one wants to print money either – quite why I don’t know – that leaves debt. So we needed to raise the debt ceiling. This is the sort of thing grown up countries do without much ado.

Not here.

No. Not here.

We do things in a more juvenile fashion.

When Obama offered up cuts in order to strike a deal he kept getting rebuffed. Whatever he offered was never enough. It was a classic case of trying to negotiate with hostage takers. Every offer is met with the ante being upped. The hunger for ransom is never sated. Gridlock ensued. In order for America to save face in the world money markets and in order to avoid the potential of an devastating interest rate hike, Obama and Congress punted instead. Thus the sequester was born.

The point was to make the automatic cuts within the sequester so horrible for everyone that both sides would naturally seek to avoid them.

So much for that idea.

Instead of avoiding them everyone spent the interim thinking through the cuts and then coming to terms with them. Those on the right just love the idea of smaller government so much that slashing defense spending by 9%+ was worth smashing away at programs for the poor. On the other side, leftists got used to the idea that slashing defense spending by that much was an opportunity not to be missed even if a few million poor folk got hammered along the way. The political game outshone the economic impact. People took their eye off the economic ball and focused on the damage they could inflict on the other side. Losing 700,000 jobs became collateral damage.

And this is where Keller and his ilk start to go wrong:

Obama tried to avoid this. He offered up more than one plan. Some of his cuts exceeded what the Republicans had wanted to begin with. He made a huge effort. It was not reciprocated. Every time he made a move it was turned down. It was a decidedly lopsided affair. It was not Obama’s fault.

In order to get at how badly Keller gets it all wrong we need also to get inside his view of ‘leadership’ and ‘fairness’.

Apparently the President ought to capitulate on his deeply held views, even after winning re-election, in order to meet Republican demands. This would be, according to Keller, ‘leadership’. It’s the kind of leadership Chamberlain gave to Britain when he appeased Hitler. Such leaders give in so as to preserve the illusion of peace. Keller is advocating appeasement.

Worse: he attacks Obama for running a re-election campaign built around protecting the middle class, women, and minorities. He is criticized for ‘Obamacare’ which is characterized as a huge government entitlement program. Which it absolutely isn’t. It lowers costs long term, it doesn’t add to them.

Obama is then slapped for not dealing with the fundamental issue of our times. This is the fiscal ‘crisis’ and our annual federal deficit.

Yawn.

You and I are smart enough to know that were there a true fiscal crisis, the money markets – not exactly allies of the president – would be charging exorbitant interest rates on the money they lend us. Interest rates would be rocketing. Are they? Not even remotely. Our creditors are trucking money to us to borrow. And, given the relationship between inflation and interest rates, they are giving us money virtually free.

This isn’t a crisis. It is a once in a lifetime opportunity to borrow as much as we can in order to fix our rotten infrastructure, schools and so on. It’s interest free for goodness sakes! It means that instead of pretending to have great airports, electrical grids, cell phone service, roads, schools and so on we can actually have those things for real. How cool would that be? Instead of ranking at the bottom for internet service we could have one that works. No. Really.

But we aren’t thinking that way at all.

Why?

Because of dumb people like Keller.

They have bought into the fear mongering of the fiscal crisis advocates. They take it as common knowledge that we have a ‘crisis’, so it is therefore ‘leadership’ to abandon principle and deal with it.

All you need to know about how little Keller understands of reality is that he mentions Simpson-Bowles with a straight face. For the record: Simpson-Bowles, that oft lauded but little read – for good reason – ‘solution’ to our ‘crisis’ are paid for and bought by big business. They are representative of the so-called serious centrists who imagine we actually do have a fiscal crisis and that, insert a huge sigh here, we can no longer afford all those nice entitlements we want to give ourselves.

This is rubbish.

We can afford exactly what we want. It would involve tax increases, especially on big business. So it is not exactly a surprise to see the team that fronts for big business arguing that the crisis is real. Fixing it sensibly would cost their patrons big bucks.

So let’s hammer the poor, the sick, and the elderly instead. Oh. And let’s fire some teachers too. They’re a nuisance anyway. Presumably the 300,000 teachers we have fired since 2009 isn’t enough.

Anything to protect profits.

It is not Obama’s fault. Keller just wants to sound serious and apportion the blame evenly because the alternative is unpalatable. That would be to dig in and talk about the real cause of our problems.

The true cause is simple to identify: the steady rightward drift of the Republican party – over several decades – and its current ideological position.

And this is the most important point we must all bear in mind: contemporary Republicans, especially those of the far right, don’t want to negotiate over budget cuts. They simply want to get rid of our social programs altogether. This is why they are never satisfied with anything Obama offers up. It can never be enough. Not until Social Security and Medicare disappear altogether along with the multitude of smaller programs the Federal government runs. Like the national parks, cancer research, food safety standards, and so on. These programs, large and small, are an affront to modern Republicans who regard them all – every one of them – as waste, and things that some private venturer could do better.

This is what they mean by ‘smaller government’. Obama and his election supporters don’t share this view at all. Indeed the two views cannot be reconciled. There is no middle ground. No center. No consensus to converge on.

This makes all negotiation hollow. It makes repeated crisis certain. We should expect the awful mess in Washington to go on for a while. That is until we, the people, decide what we want America to be.

Which, of course we just did. Obama won re-election largely be describing an America that the majority want. Unfortunately, some – not all – Republicans didn’t get, or don’t like, the message.

And that is the real cause of our problems. The extremists haven’t gone away yet. They want to fight on despite their loss. They can make mayhem in our political system because it bends over backwards to protect minority interests and frustrate the majority.

So, I suppose, in a manner of speaking the really, really true cause of our problems is the inflexibility imposed on us by the Founding Fathers and their ancient deep seated fear of democracy.

They were a limited bunch weren’t they. Look at the mess they made.