Since that day in 2012 when President Obama suggested imposing across-the-board budget cuts, known as the “sequester,” if a bipartisan panel couldn’t agree on a budget, which it couldn’t, he’s been trying to kill his brainchild.
First, he and his mouthpieces denied that Team Obama proposed the idea, blaming Republicans instead. But Washington Post journalist Bob Woodward published a piece busting that lie, whereupon White House press secretary Jay Carney owned up to the sequester’s authorship.
Then in February and March of 2013, Obama and the Democrats went on a media blitz claiming that allowing the sequester to go into effect would undermine the stunningly slow Obama economic recovery. Busted again.
The stock market, which had been inching up, albeit haltingly, began a solid drive beginning in November 2012—when it became clear the committee would fail—to new highs that we’re still enjoying.
In addition, the unemployment rate began a steady decline. The Bureau of Labor Statistics says the unemployment rate was 8.3 percent in January 2012. By January 2013, as the sequester was about to go into effect, the rate was still 8.0—a 0.3 percentage decline in 12 months.
However, unemployment dropped a full percentage point, to 7.0 percent, within the next 11 months. And another full percentage point in the next 10 months. It now stands at 5.7 percent.
But all good things must come to an end, and that goes double when Washington feels its spending ability infringed. We say “feel” because as you can see from the graph, the budget cuts were actually miniscule.
In December 2013, Rep. Paul Ryan and Sen. Patti Murray developed a two-year budget framework that “relaxed” some sequester constraints, especially in defense spending, but supposedly recaptured those savings toward the end of a 10-year period. The House and Senate passed the law, with significant opposition, and the president signed it, thrilled that he could spend more money.
Now we’re back and Obama would like to get rid of the sequester budget caps entirely. That would be the worst thing Congress could do. While across-the-board budget cuts are a blunt fiscal instrument, the sequester cuts were the first time in decades that federal spending was really cut—as opposed to slowing its rate of growth.
The only way Republicans will be able to make Obama negotiate in good faith is to keep the sequester caps in place until he signs a budget reform bill. If Obama is willing to discuss pro-growth tax reform, great. If not, then keep the caps. They may not be efficient, but at least they work.
March 3, 2015