Government Spending

Obama: Never Learn Not to Spend or, Can We Cancel Sequester Again?


You've got to hand it to Barack Obama: He's never afraid to say stuff that is appalling. Especially when it's got to do with potentially cutting government spending. 

Back in August 2011, when faced with a debt-limit showdown, Obama cut the following deal: For a $2 trillion increase in the amount of money the government could borrow, the government would agree immediately to $900 billion in trims on expected spending over the next 10 years and it would work to come up with another $1.2 trillion in similar "cuts" by the end of 2011 (cuts is in quotes because the recissions aren't actual year-over-year reductions but minor trims on a decade's worth of spending equal to around $44 trillion). If Congress couldn't agree to $1.2 trillion in future cuts by the end of 2011, then automatic, across-the-board cuts of the same amount would go into effect in January 1, 2013, mostly on defense spending and other discretionary spending.

So what happened? Nothing, of course. The sequestration cuts were pushed back to March 1, 2013. With that new deadline approaching, Obama is now calling for yet another incomplete:

"If Congress can't act immediately on a bigger package, if they can't get a bigger package done by the time the sequester is scheduled to go into effect," Obama said in the White House briefing room, "then I believe that they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months until Congress finds a way to replace these cuts with a smarter solution."

This is ridiculous, to say the least. We have a federal government that hasn't been able to pass a budget in years—not because of ideological gridlock but because of bipartisan incompetence. And every time a trigger date comes around, all sides work like hell to figure out how to worm a way around it. By most counts, sequestration will take about $55 billion out of the Defense budget (whose 2012 baseline was around $535 billion, not counting other add-ons that bring national security spending to a grand total of $928 billion). Another $35 billion or $45 billion will come out of other discretionary programs. Sequestration is a blunt tool—everything gets cut, across-the-board—but that was the whole idea of using it as a threat: It's so bad that the government would of course come to some agreement to avoid it.

Well, they haven't and Obama's proactive punting is yet one more sign that the adults left Washington some time during the second Washington administration (indeed, Obama is already late with this year's budget proposal). If Obama wants to avoid the blunt force wounds inflicted by sequestration, he can put a few of his best and brightest on coming up with more surgical cuts to programs that nobody really needs.

The Republicans should do the same, but don't hold your breath. According to the Washington Post, here's Speaker of the House John Boehner's idiot wind: "The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years." Thanks, Speaker, that's really helpful.

Suffice it to be said: The federal government is expected to spend $3.5 trillion dollars in fiscal year 2013 (which ends on September 30). Cutting $100 billion from that amount should not be difficult. Between 2001 and 2012, inflation-adjusted spending increased by around 55 percent (see table 1.3). If the government cannot find the courage to hit the deadlines it imposed on itself, it will be up to voters—75 percent of whom think the budget deficit is a major problem that needs to be addressed now—to force the issue.