Politicians grasp sequestration's risks but have done nothing.
The nation's lawmakers should consider themselves fortunate that Congress' abysmal 13 percent job approval rating in a recent Gallup poll wasn't worse. Given the reckless budget cuts created by the 2011 debt-ceiling deal -- the details of which are just coming to light -- they didn't deserve to earn double-digit support.
On Friday, the political drama that narrowly averted a national debt default last summer continued to play out in ways that raise questions about the nation's creditworthiness and its ability to govern itself. After prodding by Congress, the White House released a report detailing how the $1.2 trillion in automatic spending cuts triggered by the deal and the failure of the congressional debt "supercommittee" would affect key programs just after New Year's.
The agreement passed with bipartisan support by the House and Senate and was signed by the president last summer. The automatic cuts often referred to as "sequestration" would come to about $109 billion a year over the next nine years after debt service savings are woven in. The cuts would be split evenly between the military and domestic discretionary spending, which includes medical research, food and drug safety, public health, air traffic control, education and disaster relief. Medicare faces a 2 percent reduction, mostly borne by providers. Conveniently, lawmakers' salaries are left untouched.
The goal was to make the automatic cuts so painful to Republicans and Democrats that the supercommittee could hurdle current intransigence on tax increases and entitlement reforms and forge a balanced, long-term debt reduction deal. But even sequestration's threat of goring each party's special interests -- defense programs would generally take a 9.4 percent cut, while social programs would typically face an 8.2 percent cut -- didn't spur compromise.
That begs the question: What, if anything, will?
Republicans are on target with their criticism of the Obama administration for not specifying the real-life impact of the cuts before now. But GOP leadership has disingenuously dubbed the deal the "president's sequester," and accused Obama of undermining national security with defense cuts. The reality is that both parties and the president supported the deal, and they all had enough details to understand the potential impact. Yes, the overly aggressive cuts do threaten military capabilities. And the social spending cuts for infrastructure, public health and research (a vital part of Minnesota's economy) also threaten future growth.
Yet 10 months have passed since the supercommittee's failure and little, if anything, has been done to avert the triggered cuts. "There's plenty of culpability to go around,'' said former Minnesota Republican Congressman Bill Frenzel, now a budget expert at Brookings Institution. "They've all got dirty fingers.''
The Congressional Budget Office is warning that the cuts could plunge the nation back into a recession. The respected Bipartisan Policy Center has said the cuts could cost more than a million jobs -- and because the government relies so heavily on private contractors, those won't just be bureaucrats who are out of work -- yet achieve little when it comes to long-term debt reduction.
According to BPC's calculations, the cuts would simply delay by two years the point at which publicly-held debt surpasses 100 percent of the GDP. The reason these big cuts do so little long-term? "It tries to take 10 percent of deficit reduction out of less than one-third of the budget -- and it's the part of the budget growing slowest,'' said BPC's Steve Bell. Bigger structural drivers of deficits, such as entitlement spending and tax expenditures (deductions and credits that sap revenue), are left relatively unscathed.
The question now is not who's to blame, but what can be done to replace these risky cuts with a more sensible plan? While the BPC issued a plea for Congress to act before the election, the House has cavalierly canceled its October work session and will head home shortly to campaign.
The election isn't likely to provide either party with a mandate. That's why the key questions candidates should have to answer in the weeks ahead is how sequestration could be averted and whether they're willing to compromise to reach a balanced long-term debt deal so vital to the nation's future.
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