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How Republicans see the sequester

On Monday, after I admitted that I still didn't understand the GOP's position on the sequester, I had a lot of useful conversations with Republicans both in and out of government about their view of the issue. The first fact worth noting is that there's no Republican "position" on the sequester. There are a set of positions -- perhaps it would be more apt to call them theories -- that sometimes match up and sometimes don't.

One argument -- the most common argument -- is that Republicans are simply done raising taxes. Many respondents couldn't even believe I was asking this question, as the answer was so thunderingly obvious. The GOP's top priority is resisting further tax increases, and given President Obama's insistence on new revenues in any sequester replacement, their position on the sequester is exactly what you'd expect if you held that principle as inviolable. There's no cause for confusion here.

In Washington, the Republican hatred of tax increases is treated as less a policy position than a law of nature, like gravity, or the sun rising in the East. This permits it to escape serious scrutiny. But in this case, it deserves some.

There are two ways to increase revenues. One is to raise marginal tax rates, which Republicans loathe. The other is to cut tax expenditures. Republicans like cutting tax expenditures! They think -- correctly -- that tax expenditures are a form of government spending. Here's what Republicans said about tax expenditures in their 2012 budget:

Sometimes referred to as “tax expenditures,” these distortions are similar to government spending – instead of markets directing economic resources to their most efficient uses, the government directs resources to politically favored uses, creating a drag on growth.

The only tax increase on the table in the sequestration discussion is a cut to tax expenditures -- to "distortions [that] are similar to government spending" in which "the government directs resources to politically favored uses, creating a drag on growth." No one is even discussing an increase in marginal tax rates. And if Republicans agree to cut tax expenditures, they can get, in return, entitlement cuts, and they can protect defense spending, and they can get more deficit reduction.

Pushed on this point, various Republicans I spoke with made different arguments. One argument was that Republicans are saving cuts to tax expenditure because they want to use them to pay for rate-lowering tax reform later. House Speaker John Boehner, in fact, signaled on Tuesday that Republicans are planning a massive tax-reform effort.

But that effort, so long as Barack Obama remains president, is doomed to failure. The White House will not accept tax reform that doesn't include new revenues. And if Republicans regain power in 2016, after cutting a big deficit-reduction deal with the president that closes out $600 billion in tax expenditures, they could lower rates, as George W. Bush and Ronald Reagan did, without closing tax loopholes -- and they could have cut entitlements with Democratic cover.

That sets up the next argument some Republicans I spoke to made: that they simply don't trust the White House. "Republicans have concluded the White House is just not serious about doing anything on entitlements," said one GOP Senate aide. Their narrative on the past few years is a perfect mirror image of the Obama administration's. Just as the Obama administration feels Republicans have repeatedly walked from the table, Republicans believe the Obama administration has continually rejected reasonable deals that would trade entitlement reform for tax increases. "Read Woodward's book," one told me.

A related point is that Republicans feel they've lost the PR battle in the negotiations against the president. The White House has come out looking more reasonable, the Republican brand has been further tarnished, and the result, at least in part, was that Obama won reelection and came out of the fiscal-cliff negotiations strengthened.

The result is that Republicans feel that negotiations with the White House are both substantively and politically fruitless. Boehner literally isn't sure his speakership could survive further negotiations with the White House -- particularly if they end in some kind of compromise. So Republicans have decided to see what happens if they simply don't negotiate.

Undergirding this decision is a certain level of comfort with the cuts in the sequester, if not their across-the-board nature. Republicans feel, with a certain amount of glee, that the Democrats didn't understand that today's GOP cares much more about cutting spending than protecting defense, and so they basically got one over on the White House in the design of the sequester. The crude, across-the-board nature of the cuts is objectionable, and Republicans are considering various ways to fix that -- including giving the White House more discretion in implementing the sequester -- but the basic quantity and distribution of the cuts is, if not optimal, far better than nothing.

Insofar as there's a long-term strategy here, it comes down to 2014. Republicans feel that this is a defensive year for them, and if they can resist further tax increases while locking in some spending cuts, that will be more than they could reasonably have expected in the days after the election. But in 2014, they expect the implementation of Obamacare to be a debacle that will give them an opportunity to mount a policy offensive against the White House. If they can just get through this year and get to 2014, their position will strengthen considerably.

But that plan blurs over the next six or so months, in which Congress somehow has to pass legislation funding the federal government and then raise the debt ceiling. Republicans aren't quite sure how they're going to get their members to vote for those items, and either of them could trigger the kind of apocalyptic showdown that forces lengthy negotiations and some kind of compromise -- exactly the situation Republicans are trying to avoid. More on that later.