Sequestration Boogie

GeniusWell, it’s here.  It’s the day the Mayans predicted!!   It’s the beginning of the end of civilization in the Americas! Sequester Disaster Day is here! Well, it’s here for those of us that like to drive on roads and across bridges.  It’s here for those of us that will rely on social security or medicare this month or shortly.  It’s here for those of us that have kids in schools or would like to go to university.  It’s here for those of us that would prefer to live in a civilized country instead of The United States of Mississippi. For politicians and punditry in the beltway, it’s just another ball where they get to show off their designer formal wear and fancy dance steps.

As the automatic across-the-board spending cuts are set to take effect today and as President Obama meets at the White House with congressional leaders, we have to get this off our chest: This has been an absurd week. Today’s White House meeting is coming only at the last second; there’s been no sense of urgency, no negotiating, and Congress has left town; and, when you think about it, this hasn’t even been a true budget showdown. Given the lack of urgency and negotiating, it’s hard not to conclude that — deep down — plenty of folks on both sides of the aisle are OK with having these cuts take place, at least in the short term.

That’s from Chuck Todd et al.  I agree.  None of this makes sense if you think of economic policy or actually the idea of governing a country efficiently.  I have decided that the only thing Washington cares about is the political dance and political boogie surrounding the process and not what actually happens to the nation. For some reason, these cuts play in the beltway.  In that vein, Dave Weigal thinks Obama is winning the process cotillion.  Will it’s good some one is winning because there are certainly going to be about 320 million losers out here in the great fly over that exists behind Washington DC and Manhattan.

Republicans have one goal, running through all of these negotiations. They don’t want sequestration to be replaced by tax revenue. Any tax revenue. Forcing the president to swallow $85 billion in cuts this year would do that. They’ve got no obvious alternatives.

But a plan like this exposes a quirk of Obama-era fiscal hawksmanship. Republicans want specific cuts. Some of them—total repeal of Obamacare!—they’ll put on the record. The rest of them, they try to put on the White House. As soon as the “supercommittee” failed and sequestration looked real, it became “the president’s sequester.” The 2011 debt-limit deal delayed real action until after the 2012 election, betting $1.2 trillion of chips on its results and giving them to the president. Even the first great structural victory of the Tea Party, the ban on legislative earmarks, handed more clout to the White House. “The power to make thousands of spending decisions, on everything from which flood control projects will be funded to how spending on military bases will be distributed, to President Obama,” warned two political scientists at the time. Republicans ignored those particular political scientists.

Vote by vote, accidentally, Republicans are endorsing an imperial vision of the presidency. Perhaps they’re picking this up by osmosis. The default position of the punditocracy is that the president must lead. The lazy pundit invokes Harry Truman’s desk ornament, “The Buck Stops Here,” as a totem of great wisdom. Brendan Nyhan, who isn’t lazy, calls this “the Green Lantern Theory of the Presidency,” after the D.C. Comics superhero and his ring that runs on willpower. Bob Woodward offered a sterling example of the theory this week, when he suggested that the president’s willingness to obey the Budget Control Act (the law that mandates sequestration) was “madness.”

See, I actually think they all must want all these cuts.  They are so far removed from any impact that any of this would actually have that they’re just ignoring it.   As a matter of fact, the similarly out of touch punditry likes the idea of it too.  Let me offer of this from Ygelasias:”A Cheer or Two for Sequestration.

But on the merits it seems to me that while sequestration is hardly optimal budget policy, it really isn’t all that bad in the scheme of things, and really going through with it would be better than repealing it. The key reason is that fully half the cuts are cuts to “defense” spending, and yet nobody from either party is seriously trying to maintain that America will be left defenseless in the wake of this reduced military spending. The specific sequestration mechanism is clearly awkward and clumsy, but again nobody’s saying the Mexican army is going to come swarming over the border to reconquer Santa Fe, that the Taliban is now going to be able to outspend the Pentagon, or that America’s NATO allies are now left unable to fend off a Russian invasion. That’s half the cuts with basically zero real public policy harm.

So then you look at the domestic side. Your basic transfer payments to poor people are spared, your transfer payments to the elderly are basically spared, and then everything else gets cut willy-nilly. That leads to some real policy harms. Valuable research grants are going to not happen. We’ll see some real bottlenecks at regulatory agencies. But obviously there’s some waste and fat in this domestic discretionary spending.

Long story short, if you’re a defense dove like me and have a nonutopian view of the domestic discretionary budget, then this looks like we’re mostly talking about harmless spending cuts.

This from a man who had to get a wife from an on line dating service which is basically the equivalent of a mail order bride.  How much do you have to hate yourself to troll around online for an equally desperate person?

Let me just return to the economic impact of all of this.

Yes, the across-the-board spending cuts will lead to hundreds of thousands of job losses and a fiscal drag of 0.6 percent for 2013, according to the forecasting firm of Macroeconomic Advisers. Mostly, though, the rub is the timing and the inartful nature of the cuts.

“It would clearly be preferable to have a more orderly process for fiscal adjustment than the indiscriminate effects of sequestration,” wrote Macroeconomic Advisers in a recent research note.

The inopportune moment of sequestration — hitting just as the economy shows bright spots — will create a drag on the economy in a slow-motion manner. First, the furlough notices will go out in March to federal employees, the majority of whom live outside of the Washington metro area. Unemployment checks will drop as early as April for the long-term unemployed who receive the federal benefit checks.

States eventually will have to decide how to cut programs for low-income or vulnerable people that are funded through federal grants, such as child-care assistance, nutrition programs for women and children, mental-health services, and meal programs for senior citizens.

If Congress keeps the sequester cuts in place for a few months, then the economy will start to feel the effects. Federal workers furloughed for as many as 22 days between mid-April, when the furloughs are expected to begin to occur, and the end of the fiscal year will face a pay cut of as much as 20 percent. This will have ripple effects throughout the economy on consumer spending as well as state income and sales taxes.

By July, August, and September, the impact of sequestration should be fully felt. “We’re not going to go into a downward spiral overnight, but the spending cuts will build, and as they build, the effects will become noticeable,” says Nigel Gault, the chief U.S. economist of IHS Global Insight.

Already, the economic data showed a dip in federal-government spending for defense in the first quarter, a reaction to the impending cuts.

That is the real takeaway of the sequester and its economic impact. It will not hurt the economy immediately, but it still serves as a reminder of the power the federal government holds over the economy. Even if the government cannot enact policies to boost growth, it certainly can hurt the long-term prospects.

I’d really like to know why politicians these days are united in making most people’s lives worse off while maintaining things like preferable tax treatment for people that are already better off than nearly 99.9 % of the people living on the planet?   The only thing I can figure out is that none of this impacts any of them so they could care less.  It’s not about what happens to the nation or to its people.  It’s like they’re teenagers at a country club dance. The only thing that matters is who dances with who and how they each will be perceived in the outfit they’ve chosen.  Meanwhile, what will be the cost to the country in the eventual crime and social unrest?  Ah, who cares, just buy stock in the latest company that runs the privatized jails.  It’s a sure winner.


39 Comments on “Sequestration Boogie”

  1. ANonOMouse says:

    Dak….This post is terrific. It’s terrific for many reasons, but primarily because it keeps driving home who gets hurt and who doesn’t get hurt and who doesn’t give a damn who gets hurt.

    This is the classic tale of The Haves vs. The Have Nots. and the overwhelming majority of us, even those in the middle class, are the have nots in this dance. This is full-blown, all out social-economic warfare, designed to destroy the Nation’s social underpinnings and engineered to financially benefit the Haves. The Haves and their supporters in the political arena and in the information distribution system, do not care what happens to population USA, because they are GLOBAL. They’ll just go fuck over people somewhere else on the globe and methodically devour every remaining resource. Soon we’ll all be Serfs, or maybe we already are and are just now awakening to the reality.

  2. mjames says:

    Well, Obama will not agree to end the sequestration unless and until the Republicans agree to DISMANTLE MEDICARE AND SOCIAL SECURITY! That’s his line in the sand. Cut those dastardly cost-effective (Medicare) and not-contributing-to-the-deficit (Social Security) programs. CUT THEM NOW!!!!!!!! He was sent to destroy those programs, and, by golly, he will or he will die trying. He fights for nothing else.

    That’s our “Democratic” president – an idiot, a whore, and a liar, as well as an individual so screwed up that he is incapable of any empathy whatsoever. I guess abandonment by both parents will do that to you. Cold as ice. Stupid as stone.

    No one down there in Versailles cares about us. Not one whit.

    • ANonOMouse says:

      “Well, Obama will not agree to end the sequestration unless and until the Republicans agree to DISMANTLE MEDICARE AND SOCIAL SECURITY! ”

      What? Is yours an “obama is the root of all evil” comment? If so I thought that effort left the stage with the Snow Queen.

      • bostonboomer says:

        Actually, I do believe “entitlement cuts” are Obama’s goal, as I wrote yesterday and Gene Sperling stated flatly to Bob Woodward. But Republicans don’t seem interested. I doubt if Obama will hold out on entitlements cuts to the bitter end, because the sequester cuts are going to start hurting his approval ratings pretty soon. Plus the next debt ceiling fight is less than a month away.

        I don’t agree that Obama is an “idiot” or a “whore” or “cold as ice” or “stupid as stone.” He is in the thrall of Wall Street. He does respond to public outrage, and that will be coming soon.

      • ANonOMouse says:

        Obama said today that he had offered compromises on SS/Medicare, but that those compromises had been rejected. I think we have a good idea what the cuts are he has offered and we’ve discussed them many times. Still I don’t think he’s the “root of all evil”. All I have to do to re-ground myself is to imagine what sort of Bills would have already passed in the U.S. House if Mitt Romney was POTUS. What fucking nightmare that would have been.

      • bostonboomer says:

        Yes, he has offered the Chained CPI repeatedly, but no bites from Boehner. I’m not sure what the Medicare cuts he wants are.

        Of course he’s not the root of all evil. He’s a politician, and as such, he’ll respond to public pressure. We’ve already seen that. What’s scary is that he’s the only thing standing between us and the destruction of the safety net.

      • mjames says:

        Well, AnonOMouse, I won’t fight the position that Obama was the lesser of two evils in 2012, although others have, quite effectively, since he entrenched rightwing dogma in the Democratic Party. I understand why people (held their noses and) voted for him. What I will say, however, is that very early on Obama signaled he wanted to cut Social Security and Medicare. That, along with his indiscriminate drone bombing, makes him evil to me. (I never said that he was “the root of all evil.”)

        The middle class has been decimated during his tenure. He has done nothing to help. He has indulged in corporate welfare like there was no tomorrow. Homeowners? 401k holders? Not so much. Jon Corzine walks free as a bird, while Aaron Swartz is dead. The Affordable Care Act will turn out, IMO, to be a gigantic boondoggle for insurers and will make health care virtually unaffordable for the rest of us.

        You are entitled to your opinion, and I am entitled to mine (which is based on both the past and the present). Let’s see where we are a year from now (unless, of course, that would be too far in the past for you).

      • mjames says:

        Wait – are you referring to Palin with the Snow Queen comment? Wow. I’m a socialist (with a small “s”), though I am still a registered Democrat. I consider my party to be taken over temporarily by rightwingers.

      • ANonOMouse says:

        I agree that you’re entitled to “your opinion” mjames, but it would be a more legitimate political critique if it wasn’t steeped in the language of the teaparty wing of the GOP. Still, you’re entitled to it.

        “The middle class has been decimated during his tenure”.

        Hmmmm!!!! I thought the financial boondoogle that tore the middle class asunder happened while GWB was POTUS. I don’t think he’s done the best job, but I do think he’s done a better job than John McCain would have.

        “Let’s see where we are a year from now”

        I’m sure I won’t be satisfied, but agreeing to assess Obama’s performance in a year is sort of foolish since there won’t be a way to compare it to what the outcome would have been with a GOP POTUS. We can only imagine. So, no thank you.

      • ANonOMouse says:

        I mean no disrespect to you Mjames, but I think the Obama hate language is counter-productive.

      • RalphB says:

        At least there was no noticeable birther bullshit in there.

      • Beata says:

        The month is still young, Ralph. Plenty of time left for that crap to show up.

    • dm says:

      I agree 100%…thank you for stating what seems to be painfully obvious.

      • bostonboomer says:

        Look who the cat drug in–again.

        Since MJames is a socialist, she probably wouldn’t fit in at the swamp.

        BTW, I consider myself a socialist to–and I’m no longer a registered Democrat. But I can live without the ugly name-calling and the bitter negativity. I think it would be better if people could work together to force the president we have to do the right thing.

  3. Allie says:

    Money and power corrupt completely. Our political class is proof positive. You can count on one hand the number of honest ones. Our laughable fourth estate are a pack of pandering know-nothings.

    Here’s an article about blind polls of government policies (via Echidne of the Snakes):

    “…when stripped of their partisan labels, the policies most favorable to the majority were those offered by the progressive wing of the Democratic caucus.”

    But these policies are suppressed in the media and rarely floated by our congresscritters. How can that be anything but a deliberate flaunting of the public’s will?

  4. bostonboomer says:

    Wait a minute. I thought Social Security wasn’t included in the sequester. You mean my check will be cut this month?

    • bostonboomer says:

      OK, I see that checks will not be cut but SSA employees will be furloughed.

      While Social Security benefits are exempted from sequestration, the Social Security Administration (SSA), which administers the benefits, is not. Cuts to the SSA budget will weaken program oversight and could make it more difficult to pay benefits accurately and for mistakes to be promptly corrected.

      Two straight years of budget cuts and hiring freezes have crippled Social Security’s ability to handle dramatic workload increases, and the additional cuts required under sequestration will cause further erosion.

      Office hours nationwide have been slashed by 23 percent, which has had a detrimental effect on processing new claims. In most offices, citizens have to wait more than 30 days to get an in-person meeting or telephone interview to file benefit applications or complete appeal requests. The odds of getting a busy signal when calling the toll-free number have tripled in the past six months alone, with 16 percent of citizens unable to reach even the automated menu when they call.

      • ANonOMouse says:

        This reminds me of the budget battle that Clinton had with the Gingrich House. If I remember correctly it affected the civilian administrative employees and consequently SS checks were affected as were Medicare & VA pmts and Military pay. Those systems are a bit different now, especially the SS benefit payment system. What will likely be affected are pmts to Medicare/Medicaid/VA. Most of SS is automated, but as noted in the article I wouldn’t want to be trying to resolve an SS problem or trying to sign up for SS or Medicare.

      • bostonboomer says:

        Signing up for SS and Medicare is mostly automated too. I signed up for SS on-line and after that the Medicare sign-up was automatic. As you say, it will be bad for people who are trying to resolve a problem or apply for disability benefits.

  5. bostonboomer says:

    From what I heard on WBUR this afternoon, Massachusetts will be hit very hard by the sequester cuts in education, research, and defense. It’s going to be bad anywhere there are lots of tech companies or research universities and hospitals.

    • ANonOMouse says:

      Also I read that grants that assist Medicare/Medicaid recipients will be hit hard. Currently many seniors who are unable to drive to Dr. appts use transportation services that Medicare/Medicaid subsidizes. These are block grants that are generally adminstred by community Not-for-profits. Not only will the people who use those services be impacted, but Docs/ pharmacies and hospitals will be impacted as well as the people who administer those NFP services. Also block grant housing subsidies are going to be impacted, which will be a disaster for many people, particularly the disabled and impoverished seniors.

      • dakinikat says:

        Bet no block grants to religious nuts for crap like abstinence only sex “education” are cut.

      • bostonboomer says:

        Are those block grants separate from Medicaid?

      • ANonOMouse says:

        Yes, the block grant programs are separate. They pay for meals on wheels, limited childcare assistance to women who qualify for Medicaid assistance, limited housing assitance to the poor, including seniors and the disabled and subsidized transportation to doc and medically related issues for the disabled and seniors who are on medicaid or who’s medicare is partially subsidized due to low income. The block grant programs are a huge help to lower income people, especially women, children, the disabled and seniors.

  6. bostonboomer says:

    As usual, Obama caves before negotiation starts on the debt ceiling: Obama Signals He’d Let Cuts Stand to Avoid U.S. Shutdown.

    • ANonOMouse says:

      The strategy by the GOP is to box Obama in between the sequester and the debt ceiling issue which comes back up in May.

      • bostonboomer says:

        The problem with that is that a huge majority of Americans–including a majority of Republicans–agrees with Obama on this. Republicans are really in danger of destroying their party.

      • RalphB says:

        One hopes for the GOP to destroy itself! They deserve it.

      • ANonOMouse says:

        One can hope!!!

    • bostonboomer says:

      Brian Beutler has a slightly different take on this: Obama Tips His Hand In Sequestration Fight

      In a key revelation, though, he identified a way for Republicans to prevent the sequestration fight from precipitating a government shutdown.

      Crucially, Obama said he’s prepared to sign legislation at the end of March to fund the government if Republicans adhere to the spending levels they agreed to during the debt limit fight in 2011.

      “It’s the right thing to do to make sure we don’t have a government shutdown,” Obama said. “If the bill that arrives on my desk is reflective of the commitments that we previously made, then obviously I would sign it.”

      His acknowledgment is important for reasons explored in this article. If House Republicans can’t pass a government funding bill that sets overall spending at levels agreed to in the Budget Control Act — funding that would automatically be reduced because of sequestration — then the government will shutdown and the pressure Republicans feel to cut a deal that both averts sequestration and keeps the government running will intensify.

      I’m not sure it will work.

  7. RalphB says:

    The fundamental reason Senators and, especially, Representatives are not responsive to the general public is their constituencies are their own party, with a smattering of others, because of the sorting of the electorate into tribes. Take into account the over 96% reelection rate and they don’t have to care about the state of the country to be successful. I don’t think that will change until elections become more competitive between the parties in individual districts.

    • ecocatwoman says:

      Agree & I’d throw in a BIG change in the financing of elections before our votes will be more than a one night stand with the politicians. Yeah, right – they ain’t gonna call us in the morning.

  8. ecocatwoman says:

    Just announced, Paul Krugman will be on The Ed Show tonight at 8.