Obama's Sequestration Strategy

President Obama is painting a dire picture if the House Republicans don't agree to raise taxes, yet again, to avert sequestration.

Unless the GOP agrees to a deal acceptable to Senate Democrats and the president to slash federal deficits by $1.2 trillion over 10 years, $85 billion in across-the-board cuts will be imposed automatically on March 1 — virtually all in defense and other non-entitlement spending.

The president paints a painful picture — three-hour airport security lines, fewer meat inspectors and food shortages, furloughed air traffic controllers requiring cancellation of thousands of flights, teachers and police fired, 250,000 lost jobs throughout the economy, and more.

Most of this simply does not have to happen, and a good deal is terrible exaggeration. Department heads within government agencies have considerable discretion in balancing individual accounts as required by the 2011 Budget Act.

For example, the Department of Agriculture has one of the largest teams of research economists on the planet, and their dull reports should be cut before vital services such as food inspections. Transferring administrative personnel to the economics department and furloughing a few more number crunchers would keep chicken and hamburger on the shelves at the supermarket.

Even if all spending cuts were through headcount reductions in federal departments and among contractors, each $111,000 of spending in the U.S. economy equates to one job; therefore, $85 billion even if wholly taken out in direct layoffs would imply about 77,000 jobs lost — not 250,000 as the president claims.

Most layoffs can be avoided through partial furloughs — a tactic Republican and Democratic governors employed during the Great Recession and the president could apply through executive orders.

Apparently, Mr. Obama wants a painful crisis to push Republicans into accepting even higher taxes or losing at the polls in 2014.

Learn more about the impact of sequestration.

In January, the president just got more than $85 billion in new taxes on the wealthy, higher payroll taxes for everyone, and an assortment of new levies on incomes, health insurance and medical devices through Obama Care.

The president and Democratic congressional leaders refuse to acknowledge what every bi-partisan budget panel has concluded — genuine entitlement reforms — such as, raising the retirement age for social security and federal pensions — are necessary to bring deficits down to manageable size and maintain national security and other vital government functions.

Just as in negotiations with House Speaker Boehner to avert the fiscal cliff last fall, the president has again offered no genuine spending cuts. Now he complains sequestration will require the U.S. aircraft carrier presence in the Persian Gulf to be cut in half. A 10 percent cut in naval appropriations requires a 50 percent reduction in that essential effort, because the Navy is already stretched too thin by Mr. Obama's repeated defense cuts and his new commitments in the Pacific.

The president is motivated by political gain to manufacture for taxpayer pain. The real spending choices imposed by sequestration and the fact that the president wrote the law that requires it is poorly understood by most voters, and he is exploiting the Bully Pulpit to wrongly blame House Republicans for what will surely follow.

The economy was teetering on recession as early as November, and if Americans have another bout with 10 percent unemployment, he will tag sequestration and the GOP for causing the mess.

Neither will be true. If we have a recession, other policy failures and the January tax increases are to blame, but long lines, shortages and rising unemployment will set the stage for ousting the House Republicans in 2014.

Americans will suffer needlessly when the cuts come, but President Obama, seeing partisan advantage, is putting politics above public welfare.

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. Contact him at pmorici@rhsmith.umd.edu.

 

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