The Sequestration Follies: How Washington Outsmarted Itself

By , Associate Editor, Money Morning@DavidGZeiler

It seems every politician in Washington is up in arms over sequestration, the devastating automatic budget cuts on track to take effect March 1.

For weeks, lawmakers on both sides have been calling sequestration a "bad idea" and criticizing any proposals put forth by the opposing party.

Politicians aren't happy that sequestration not only would cut billions of dollars in federal spending, it would also slash the budget indiscriminately with across-the-board cuts.

Just today (Tuesday), President Barack Obama urged Congress to delay sequestration for the rest of the year or risk damaging the U.S. economy.

"It won't help the economy. It won't create jobs. It will visit hardship on a whole lot of people," President Obama said. "If Congress allows this meat-cleaver approach to take place, it will jeopardize our military readiness; it will eviscerate job-creating investments in education and energy and medical research."

Listening to all the rhetoric, Americans with short memories might believe that those in Washington only have the best interests of the country at heart.

But the rest of us remember how this whole sequestration fiasco really happened. It was their idea – Republicans and Democrats, the White House and Congress. All guilty.

"The idea was that no sane person would allow such cuts to happen," Bob Schieffer, host of CBS News' "Face the Nation," said on that show Sunday. "Well, guess what. Even Washington managed to underestimate its own ineptitude."

The Sequestration Cookbook

One of sequestration's most vocal critics in the past six months, President Obama, fathered the idea during the contentious debt ceiling battle in the summer of 2011.

The goal was to satisfy Republican calls for budget cuts without actually making any, as the sequester was set to occur 18 months into the future. And making the sequester automatic and painful for both sides – with large cuts to both defense and domestic programs – was supposed to provide incentive to make a deal happen by Dec. 31, 2012.

The Budget Control Act of 2011, which included sequestration, passed both houses of Congress with overwhelming support from both Democrats and Republicans.

But what both sides failed to consider was their mutual stubbornness on how to deal with the federal budget deficit. The Democrats favor some combination of spending cuts with tax increases, but Republicans want only to cut spending.

Both expected the other side to blink when the Dec. 31, 2012 deadline approached … and neither did.

Instead, sequestration became part of the fiscal cliff imbroglio and got put off until March 1 in the deal passed by Congress on Jan. 1.

Numerous proposals to address sequestration have emerged from the House and Senate as well as the White House, but none are acceptable to all sides.

The divide was apparent again today as House Speaker John Boehner, R-OH, responded to President Obama's remarks.

"The president offered no credible plan that can pass Congress – only more calls for higher taxes," Boehner said.

The Real Problem Congress Has With Sequestration

The unworkable plans offered by both sides suggest that either both sides believe they can bully the other into accepting their solution or that neither really wants to deal seriously with budget issues.

The latter is far more likely. The sequester imposes nasty budget cuts, but any alternative still would include budget cuts. And any Democratic alternative would also include tax increases.

With Washington lawmakers always looking ahead to the next election, asking them to vote for any combination of less government largesse and higher taxes is like asking them to voluntarily take poison.

That neither side seems particularly interested in seriously tackling budget issues is apparent by their reaction to the bipartisan efforts of retired Republican Sen. Alan Simpson and Democrat Erskine Bowles, a former White House Chief of Staff under President Bill Clinton.

President Obama made the two co-chairs of a commission in 2010 that developed what most economists said was the reasonable and practical deficit-reduction plan. Members of both parties turned up their noses and instead voted for sequestration.

Since then, Simpson and Bowles have offered up several variations of their plan, including one during the fiscal cliff talks.

Democrats and Republicans in Washington have ignored them all.

Today, the undaunted duo presented yet another version of their plan designed to offer a deficit-trimming solution that avoids the blunt-force instrument of sequestration.

The new Simpson-Bowles proposal would reduce the federal budget by $2.4 trillion over 10 years, far exceeding President Obama's stated goal of $1.5 trillion.

It's unlikely to get much, if any, support, from lawmakers.

In fact, there are few members of Congress even in Washington right now, as most returned home for a weeklong President's Day recess despite the looming March 1 sequestration deadline.

When Congress returns Feb. 25, it will have four days to come up with a deal that either replaces sequestration or delays it one more time. If there's no deal, then America will get the sequester – like it or not.

"The sequester and the draconian cuts are about to happen, because the White House and Congress can't close the partisan divide and figure out what to do with them – which is disheartening, to say the least," Schieffer said in his commentary.

Check out this list of the automatic spending cuts slated to go into effect if Congress does nothing.

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    Except, the cuts proposed in sequestration are not really all that "Draconian" afterall. The "cuts" per year are a tiny percentage of current annual Federal spending and remain a small percent of the amount of debt we will have further build-up in 10 years. Rather than 'cuts', they are actually a reduction in the amount of spending growth.

    We need sequestration to hold the President and Congress's "feet to the fire", but we should know in the end (deadline) they can not take the heat. The unfortunate fact is Congress simply can not just say "NO". So, its all a fake and the spending and national debt will continue to grow until something eventually breaks. Financial failure is imminent.

  • "The president offered no credible plan that can pass Congress - only more calls for higher taxes," Boehner said.
    That is because it isn't his job! It is the job of the House to come up with a plan. The pres just said he would not pass whatever plan they come up with unless it contains higher taxes for the wealthy. Just pointing them in the right direction to make their job easier and faster. Apparently Boehner doesn't know what his job is.

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