Promoting freedom, innovation, and growth

Connect with IPI

Receive news, research, and updates

October 27, 2015

RIP: Budget Sequester, 2013-2015

 

Step up and pay your last respects to the budget sequester. It was only with us a few years, but it made a big difference in its short life and untimely death. 

President Barack Obama was its father, and Republicans were its mother. It was conceived in the summer of 2011, in yet another of the many showdowns over the budget and federal debt ceilings. 

The White House suggested the sequester as a way to get an agreement—though it denied that vociferously until Washington Post reporter Bob Woodward confirmed it. The provision was codified in the Budget Control Act that went into effect in August of 2011. Its “delivery” was delayed from January 1, 2012, to March 1, when it saw the light of day. 

Obama, who hasn’t gotten one thing right yet on economic policy, warned the country of the economic devastation that would occur if Congress didn’t kill the sequester. Congress didn’t and the economy took off. 

The Dow Jones Industrial Average was just under 13,000 at the beginning of March 2012; today it’s above 17,000. Unemployment stood at 8.2 percent that March; today it’s 5.1 percent. 

If the sequester killed the economy, someone forgot to tell investors and employers. 

But its real benefit is that it made real cuts in government spending. Total federal outlays declined from $3.6 trillion in 2011 to $3.5 trillion in 2014. As a result, the annual federal deficit dropped from $1.3 trillion in 2011 to $490 billion in 2014.  

The sequester has been the single most important factor in imposing fiscal restraint in our lifetimes. That’s a success story that the left just could not tolerate. And so Obama recently demanded that both military and domestic spending increase, busting the sequester caps.  

Soon to be Speaker Paul Ryan set the precedent for busting the caps with his two-year budget deal with Senator Patty Murray in December of 2013. The Republican leadership praised it saying that it would get other savings in the out years. No one believed that. The sequester was on life support. 

Now exiting Speaker John Boehner has pulled the plug. Though Boehner is likely falling on his sword in order to save Ryan from doing the same thing, it’s a pathetic finish to a sordid legacy. 

But the truth is that many Republicans like big government spending just as much as Democrats, and they are relieved that the sequester is dead so that they can get back to the business of growing government.


 

  • TaxBytes-New

Copyright Institute for Policy Innovation 2017. All Rights Reserved Privacy Policy Contact IPI.

e-resources e-resources