Jackie Calmes has an excellent article this afternoon pointing out the real truth about current budget negotiations: Republicans don’t actually want to cut entitlements, and Democrats don’t really want to raise taxes.
That’s exactly right. Not only that, but both sides (with the likely exception of a small group of tea party radicals and an even smaller group of true fiscal conservatives) don’t really want to continue sequestration. I suspect that a lot of liberals would be happy to live with sequestration cuts to defense spending and a lot of conservatives would be happy to live with the cuts to domestic spending, but overall? It’s a bad deal for everyone.
The best solution is to just cancel sequestration and replace it with, well, nothing.
Yes, that means higher short-term deficits than if sequestration continues, but deficits still would be way down from their peak, and most economists (and the Federal Reserve Board) believe that deficits should be higher, not lower, right now. Most (but not all) economists do want long-term deficits lowered, but that’s not going to happen right now, sequestration or not.
Granted, it would be dangerous for many Republicans to simply cancel sequestration and admit that they prefer higher deficits. The second-best plan, then, and the real obvious solution to getting through at least until the 2014 elections, is phony spending cuts — budget gimmicks and other methods of achieving paper cuts that don’t actually do anything.
My guess is that there’s less risk to Republicans than they might think for accepting higher deficits. Sure, some tea partyers will accuse them of not really cutting spending, but everything that’s happened since the 2010 election suggests that many movement conservatives won’t believe spending cuts no matter how real they are, so can it really be worse if the cuts are phony? And it’s still the case that (almost) no one actually cares about budget deficits, so the electoral effects of larger deficits aren’t worth worrying about as long as the economic effects aren’t important. Which is what most economists are saying.
I’m not optimistic that they’ll figure this out, but cancelling sequestration and replacing it with phony spending cuts really is the best way through the next budget showdown.