Subject: Washington Post
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, <[email-masked]>, "David Schwerin" <[email-masked]>
Date: Mon, 28 Jan 2013 07:51:39 -0500

http://m.washingtonpost.com/blogs/wonkblog/wp/2013/01/26/republicans-think-the-sequester-gives-them-leverage-theyre-wrong/

Republicans think the sequester gives them leverage. They’re wrong.

By Ezra Klein,  Published: JANUARY 26, 8:34 PM ET
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Now that Republicans have delayed the debt ceiling for three months, their next point of attack, they say, are the deep spending cuts in the so-called "sequester." House Speaker John Boehner told the Wall Street Journal editorial board that the sequester is “as much leverage as we’re going to get.” He meant that to sound reassuring to conservatives. But I can't figure out why they're reassured.

The problem with the GOP's plan to use the sequester as leverage is evident as soon as you stop using the vague term "sequester" and instead call the policy what it is: A bunch of very dumb — but extremely Democrat-friendly — spending cuts.

To understand the problem Republicans are going to have using the sequester as leverage, you need to understand the bargain they made when they created it. The policy dates to the final days of the 2011 debt-ceiling fight. Both sides realized that the only way out of that mess was to kick the can down the road. So they formed the "supercommittee," a bipartisan group of legislators charged with finding $1.2 trillion in deficit reduction.

The problem with the supercommittee was obvious: If Congress couldn't agree on a deficit-reduction package, why should the supercommittee have any more luck? The sequester was meant to be the answer to that question: If the supercommittee failed, the sequester would cut the deficit by $1.2 trillion automatically, but it would do it in such a mindless, blunt way that neither party would be able to live with the consequences.

That suggested an obvious design for the sequester: Half taxes, which Republicans hate, and half spending cuts to programs Democrats care about. But Republicans refused to vote for anything with taxes in it — even though the point of policy was for both sides to fear it. So they made a concession to the Democrats: If the sequester was to be all spending cuts — $984 billion, to be exact, which, when added to lower debt payments, totaled $1.2 trillion — then the spending cuts would leave the main Democratic priorities untouched.

And so the sequester doesn't touch Medicaid, Social Security or Pell grants. It exempts most programs for low-income Americans, like food stamps. Veteran's benefits are home free, as are federal retirement benefits. Medicare providers see cuts, but Medicare beneficiaries don't. And fully half of the cuts come from the military — a huge reduction in defense spending that Democrats couldn't dream about achieving any other way.

That's not to say Democrats will love the sequester. It slashes deep into everything from the National Institutes of Health to the Office of Vocational and Adult Education to the Environmental Protection Agency. Worse, the cuts are done with a cleaver rather than a scalpel. Rather than giving agencies control over how to apportion the spending cuts, every affected program simply sees the same reduction. Democrats don't much like that, but given the sequester's disproportionate focus on the military, it's even worse for Republicans.

"Both parties dislike the sequester and they should," says Bob Greenstein, president of the Center on Budget and Policy Priorities. "It's a terrible way to cut budgets. But it's not clear to me why Democrats would hate it more and back down first relative to Republicans."

Moreover, policies like the sequester rarely survive for very long. "The truth is we have a very weak record of things like the sequester actually coming to pass," says Doug Holtz-Eakin, president of the American Action Forum and the top economic adviser to John McCain's 2008 campaign. "In the end, the Budget Control Act" — the legislation that created the sequester — "is built on discretionary spending caps. They're violated more than they're adhered to."

This is the kind of perverse policy outcome that's the consequence of the GOP's no-tax pledge. They could get a deal from the Obama administration that would cut Medicare and Social Security and all the other spending Republicans want to cut so long as they'd also raise taxes. And they wouldn't even have to raise tax rates — they could just get rid of loopholes and tax breaks in the code. Instead, they're threatening to cut the spending they care most deeply about using an unreliable mechanism that was designed to be so objectionable that they'd never let it become law.

But this is the corner they've backed themselves into. Having lost an election, and having tied themselves to a no-tax pledge, they're so desperate for leverage, so desperate for a hostage they can actually shoot, that they're willing to point the gun at their own head and threaten to pull the trigger.

Eric D. Schwerin
[email-masked]

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