Deep reductions in domestic and defense spending are set to begin Friday in a process known as sequestration, which will make progress toward the tea party’s goal of shrinking the government. What unfolds over the following months will be a high-stakes test of whether significant cuts in spending will help or hurt the economy — and the Republican Party’s brand.
The cuts, worth $1.2 trillion over 10 years, are slated to become reality after a period when the tea party — a movement, represented by a group of Republicans elected in 2010, whose goal is to radically cut the government — has struggled to have a lasting impact on Washington. The tea party saw President Obama win reelection and enact more than $600 billion in tax increases on the wealthy, while GOP leaders agreed to allow more federal borrowing without anything in return.
But many Republicans say the sequester is the moment when the tea party can claim it has made its mark. Although Democratic and Republican leaders are pointing fingers, the tea party and its allies are happily accepting credit for the cuts.
“This will be the first significant tea party victory in that we got what we set out to do in changing Washington,” said Rep. Tim Huelskamp (Kan.), a tea party Republican elected in 2010.
Rep. Reid J. Ribble (R-Wis.), a conservative elected in 2010 who doesn’t consider himself a member of the tea party, said the movement “was significant in getting the American people’s attention on this problem. You have to give them credit.”
‘Can’t be both bad and good’
The sequester, which will begin slowly but build over time, has put Republican leaders in a difficult corner. They say they oppose the cuts to defense spending and see little wisdom in indiscriminate, across-the-board reductions elsewhere.
But they also say they agree with the magnitude of the budget reductions — and in fact want to eventually go much further, reducing discretionary spending and entitlement programs.
House Speaker John A. Boehner (R-Ohio) recently advocated an approach that has been a hallmark of the tea party: reduce federal spending so the budget is balanced in 10 years, without any increase in taxes.
To do that, experts say, such cuts would need to generate $4 trillion to $5 trillion in savings over a decade — more than three times the $1.2 trillion under sequestration.
Huelskamp, who voted against the original bill authorizing the sequester because he wanted even more cuts, said he expects Boehner and other Republican leaders to come through but is nervous about recent statements suggesting that they might be looking for alternatives.
“They promised the sequester would happen,” said Huelskamp, who voted against Boehner for speaker this year. “For them to go back on their word certainly threatens their ability to lead.”
Some Republicans say it’s risky for GOP lawmakers to celebrate deep spending cuts while warning of their potentially negative consequences.
“It’s going to be difficult for the Republicans as a party in this,” said Tony Fratto, a former adviser to President George W. Bush. “They said the sequester is bad. You can’t say that and then say it’s a good thing, a step in the right direction. It can’t be both bad and good.”
But Barney Keller, communications director for the conservative Club for Growth, said Republicans who don’t support big budget cuts might face primary challenges next year.
“Many Republicans aren’t afraid of losing their job to a Democrat, because of redistricting” that virtually guarantees that GOP lawmakers will hold on to their seats, he said. “But they are afraid of losing their jobs to more fiscally conservative candidates.”
The effects of spending
Conventional economic theory holds that significant cuts in government spending harm the economy. Tea party Republicans, however, argue that reducing federal spending and borrowing will help minimize distortions in the economy and keep the government from crowding out private-sector growth. Quickly slowing the rise of the national debt, austerity advocates say, will raise the confidence of businesses and consumers in the nation’s long-term economic stability.
More traditional economic analysts agree that reducing budget deficits is a good goal, but they don’t think it should happen in any significant way during times of economic weakness. They tend to argue that government spending has a positive role in supporting the economy, and they note that Europe has struggled under austerity measures.
The tea party had an immediate influence on budget politics after its rise to power in 2010. Washington shifted to a debate about the size of government, and plans advanced by leading Republicans, especially Rep. Paul Ryan (Wis.), sought deep cuts in spending.
The push to slash the budget led to several battles with the White House, which would agree to cuts that were only a small fraction of what tea party members and other conservatives demanded. Many of the reductions did little to actually slow government spending.
“Up until now, this has been a clever game played on an imaginary budget,” said Douglas Holtz-Eakin, a Republican economist. “It hasn’t been real.”
Tea party members say the failure to do more hurt the GOP in last year’s election, which gave Obama a second term and Democrats gains in the House and the Senate.
“Part of that was rank-and-file Republicans were upset that we hadn’t followed through on what we had promised,” said Rep. Blake Farenthold (Tex.). “I think leadership sees that.”
No deal likely this time
The sequester was made law in the summer of 2011, after a fight over whether to raise the federal debt ceiling. Republicans would allow more borrowing only in exchange for spending cuts; the White House wanted any further discussion about the debt limit to be postponed until after the election.
The deal between the White House and Congress had authorized the sequester to begin Jan. 1, 2013, if lawmakers couldn’t find other ways to reduce the budget deficit. They didn’t, but the two sides agreed to postpone the sequester for two months in the “fiscal cliff” tax deal at the beginning of this year. Now, it doesn’t appear likely that another deal will be at hand before cuts begin Friday.
Kevin Smith, Boehner’s communications director, laid the blame for the sequester on the White House. He noted that the House last year passed bills to replace the sequester with alternative spending cuts.
“The White House is on defense because it doesn’t have a plan,” Smith said. “The president hasn’t lifted a finger to urge his allies in the Senate to pass a solution of their own.”
White House officials say they have an offer on the table to replace the sequester with a mix of spending cuts and tax increases, and they note that they back a Senate plan to postpone the sequester through the rest of the year.
Rep. Renee L. Ellmers (N.C.), who is part of the 2010 class of Republicans but not a member of the tea party caucus, said she worries about the sequester, especially since her district, home to Fort Bragg, would be hit hard. But she said it may have to happen.
“I do believe it will start a very important process that will help our economy to start to grow,” she said. “The debt that we have at the federal level is our biggest threat for our country.”