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The month of February is starting off with another Washington-made “crisis” to head off sequestration, a package of cuts totaling about $ 1 trillion. These cuts, evenly divided between defense and non-defense spending, have been deemed as devastating by several economists and public officials.
Sequestration, though, was never intended to be implemented as policy. It only came into fruition when the “Super Committee” in the Budget Control Act of 2011 failed to reach an agreement to achieve deficit reduction. Despite the failure, it was assumed both parties would come together on a long-term deficit reduction plan because the cuts in sequestration were viewed as so draconian. For Republicans, defense was viewed as the sacrifice while for Democrats it was social programs including a cut to Medicare providers.
But Republicans at least publicly signal they are just fine with defense cuts and point out the fact Democrats will have some of their programs cut as well. There is no room for tax increases, they argue, because President Obama already got his way on taxes during the fiscal cliff deal. Any attempts to replace sequestration must include an equal number of cuts.
Obama and his fellow Democrats, on the other hand, say this represents an opportunity to pursue a combination of closing tax loopholes on the wealthiest Americans and targeted spending cuts to delay sequestration. Obama also says he would like a long-term deficit reduction plan as well.
It is really too early to say who holds the advantage right now. The president certainly expended political capital on the fiscal cliff to ensure wealthier Americans would pay more in taxes but he still holds the bully pulpit. The “balanced approach” terminology that he likes to use also polls well.
Republicans may hold an advantage on spending cuts but will eventually have to spell out what they want to cut. If they push reducing the federal work force and eliminating duplicate programs, for example, they should be fine. Who is going to sympathize with the feds and government waste? If it is entitlements, though, they are asking for trouble because the Democrats will portray Republicans as screwing over seniors to protect their rich friends. It worked the last time.
There is also the danger some more defense-minded Republicans will break ranks and support some tax hikes to offset the military cuts. There are already a few cracks forming. If the split happens, Team Blue will hold all the cards.
With both Democrats and Republicans seemingly entrenched in their respective positions, it appears at least at this time sequestration will occur. But in DC, the art of the deal always seems to win out in the end even if it is at the very last second.