The sequester—a set of deep, across-the-board cuts to discretionary spending set to take effect if lawmakers cannot agree to a longterm budget deal—was never supposed to happen. But as the deadline for reaching an agreement ticks ever closer, Congress appears hopelessly deadlocked. Under the original agreement, sequestration would have triggered $100 billion in cuts to both defense and non-defense discretionary spending on January 1—an 8.2 percent reduction in non-defense expenditures. The “fiscal-cliff” deal reached in December reduced that amount to $85.3 billion and pushed the deadline back to March. Under the new deal, non-defense discretionary spending would be cut by $42.7 billion yearly for the next nine years. This is on top of $1.5 trillion in cuts over the next decade that have already been enacted.
Barack Obama’s State of the Union address last week—which called for, among other things, universal pre-K and raising the minimum wage—offered a bold program for rebuilding the middle class. But the president’s continuing commitment to budgetary austerity makes these commitments hollow, if not cynical. And just as Obama and the Democrats paid the price in the 2010 midterm election for excess caution and conciliation, the results of tokenism are not likely to be pretty in the midterms of 2014.
Senate minority leader Mitch McConnell says Senate Republicans will unanimously support a balanced-budget amendment, to be unveiled Wednesday as the core of the GOP’s fiscal agenda.
There’s no chance of passage so why are Republicans pushing it now? “Just because something may not pass doesn’t mean that the American people don’t expect us to stand up and be counted for the things that we believe in,” says McConnnell.
By any measure, President Obama’s first term was consequential. In four years, he signed an $800 billion stimulus and infrastructure investment program, laid the foundation for universal health insurance, secured new regulations on the financial sector, repealed Don’t Ask Don’t Tell, and put the United States on the path back to economic recovery.
Can we just keep things in perspective? On Tuesday, the President asked Republicans to join him in finding more spending cuts and revenues before the next fiscal cliff whacks the economy at the end of the month.
Yet that same day, the Congressional Budget Office projected that the federal budget deficit will drop to 5.3 percent of the nation’s total output by the end of this year.
The fiscal deal that raised taxes on the top one percent was a victory only for what it did not do. It did not cut Social Security, Medicare, Medicaid, or other public spending. Unfortunately, it merely put off the next round of jousting over fiscal issues to a time when Republicans will have more leverage.
If the debate around the fiscal cliff and, particularly, the still-impending sequester demonstrates anything, it’s that Richard Nixon’s one plunge into economic theory—“We’re all Keynesians now,” the former president once said—still holds. Everyone acknowledges that laying off hundreds of thousands of government employees, including 800,000 civilian Defense Department workers, and stopping payment to government contractors will, by definition, destroy jobs, at least until the payments resume. It’s still Republican orthodoxy, to be sure, to deny that government spending actually creates jobs, but even they acknowledge that the cessation of government spending destroys them. Which illustrates that the problem with contemporary Republicanism isn’t confined to their indifference to empiricism but also their indifference to logic. Reasoning—either deductive or inductive—is either beyond them, beneath them or above them.
When President Lincoln suspended habeas corpus in 1862 (a couple of times, actually), he conceded the possible unconstitutionality of what he had done but concluded that since the move was necessary in a time when half the country was at war with the other half, he would take his chances with Congress, the courts, and history. The country’s current chief executive finds Lincoln comparisons disconcerting, but this is a case where he might pay attention, because his legal grounds for unilaterally raising the ceiling on the national debt in a time of congressionally inflicted crisis are no weaker than Lincoln’s and probably stronger.
Now that the future revenue path is pretty clear for the next decade, I took another look at President Obama's 2013 budget, which projects spending and revenue through 2022 on the assumption—a correct one, it turns out—that taxes will only rise on the affluent.
Beyond yesterday’s narrow escape from the dreaded fiscal cliff are … more cliffs. President Obama and Congress averted one fiscal calamity of tax-hikes-for-all only to face even steeper cliffs—the sequester, the debt ceiling, the Social Security shortfall, ad infinitum. It is a fiscal Wizard of Oz, an extended odyssey with perils on every side.
“It’s not all I would have liked,” says Republican Senator Lindsey Graham of South Carolina, speaking of the deal on the fiscal cliff, “so on to the debt ceiling.”
The battle over the fiscal cliff was only a prelude to the coming battle over raising the debt ceiling—a battle that will likely continue through early March, when the Treasury runs out of tricks to avoid a default on the nation’s debt.
The White House’s and Democrats’ single biggest failure in the cliff negotiations was not getting Republicans’ agreement to raise the debt ceiling.
The last time the debt ceiling had to be raised, in 2011, Republicans demanded major cuts in programs for the poor as well as Medicare and Social Security.
The Senate vote just before dawn in favor of a permanent tax hike on the top one percent defers virtually all of the other budget battles. Assuming the House follows suit today, it is up to President Obama and the Democrats to radically change the conversation.
The deal emerging from the Senate on the fiscal cliff is a lousy one. Let me count the ways:
1. Republicans haven’t conceded anything on the debt ceiling, so over the next two months—as the Treasury runs out of tricks to avoid a default—Republicans are likely to do exactly what they did before, which is to hold their votes on raising the debt ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security.
The side of John Boehner we understand most is the one that offers that distant sense of comfort—the one who'll pander to the conservative movement during these fiscal cliff talks but understands a compromise must come through at the end. This is the John Boehner we dub the "dealmaker," the leader who must "stand up” to the Tea Party—and Majority Leader Eric Cantor, the rival who would do him in. His “dealmaker” persona stems from the assumption he isn’t a true believer or an aggressively ideological Republican, which is correct.
Sure, lame-duck legislatures are bound to be a bit mad. But the session that just closed in Michigan was one for the ages. Aflush with the flurry of bills sent to the desk of Governor Rick Snyder—not so much speaking to his opinion on their quality—a politics-loving friend of mine in Detroit exclaimed, “It’s like Christmas in … well, in December.”