January 30, 2013

The news today that the economy contracted thanks to a steep drop in defense spending has sparked another exchange over who is to blame for the pending defense cuts in the sequester, which pose further danger to the economy. Republicans appear to believe today’s economic news helps their case. It isn’t immediately clear why.

At his press briefing today, White House spokesman Jay Carney said today’s news should renew pressure on Republicans to avoid allowing the sequester to happen. He called on them to make a deal that includes new revenues in order to avert the sequester cuts. That prompted this response from John Boehner’s office:

These arbitrary, automatic cuts were a creation and demand of the White House in 2011. Twice the House has passed legislation to replace them with common sense cuts and reforms. If there was any uncertainty late last year about the sequester, it was because the Democratic-controlled Senate, per usual, never lifted a finger to pass a plan to replace it.

In other words, the threat to the economy posed by the sequester is the White House’s fault, because Democrats have not proposed a plan to avert it. The odd thing about this, though, is that Republicans have explicitly and repeatedly stated that they intend to use the threat of the sequester to extract the spending cuts they want without  compromising with Obama and Dems. Not long ago, before the GOP’s debt ceiling cave, Boehner told the Wall Street Journal that the sequester, and not the debt ceiling, would give Republicans their real leverage. And remember this Associated Press headline?

In turnabout, GOP lawmakers willing to risk automatic budget cuts to get their way on budget

The basic problem here remains what it was yesterday, before we learned about the new GDP report: Republicans refuse to agree to any new revenues as part of any deal to avert the sequester, and want its cuts to be averted and offset entirely by other cuts to government that would likely harm the middle class and poor. By contrast, the White House and Dems want a deal that balances new revenues with spending cuts to avert the sequester. The ledger is already stacked in the GOP’s favor: In 2011, Dems agree to around $1.5 trillion in spending cuts, while Republicans agreed to $600 billion in new revenues as part of the fiscal cliff deal.

In other words, Dems want a compromise on the sequester that brings us closer to a one to one balance of new revenues to spending cuts. In order to put pressure on Republicans, they will float the idea of nixing oil company subsidies and other revenue raisers in order to make up the cost of the sequester, which Republicans will of course oppose, revealing (Dems hope) their intransigence.

Meanwhile, Republicans will insist on a deal on the sequester that takes us still further away from such a one-to-one balance of cuts to new revenues, and they have been willing to threaten to allow the sequestered defense cuts to go forward to make this happen. As it happens, this strategy was delivered a blow today by none other than John McCain, who said: “I think using national security as leverage is a mistake.”

The news today that deep cuts hurt the economy will only make the GOP strategy look more reckless. Even more puzzling, Republicans continue to argue that spending cuts will help the economy, even as they claim that today’s GDP news increases the pressure on the White House to resolve things their way.

 

Greg Sargent writes The Plum Line blog, a reported opinion blog with a liberal slant -- what you might call “opinionated reporting” from the left.