President Obama has been jetting around the country, warning of untold pain and suffering starting today when the sequester budget cuts kick in. But if he really buys his own gloom and doom, there is a way he can avoid major cuts for the rest of the fiscal year: Recall the outstanding Troubled Asset Relief Program, or TARP, bailout money that General Motors and his Wall Street pals are still sitting on.
The sequester deal, as Bob Woodward has reminded us, was proposed by the president 18 months ago to persuade congressional fiscal hawks to raise the debt ceiling. Meanwhile, Congress had an opportunity to find alternatives to the automatic, across-the-board cuts (or sequester), but it failed.
America's annual trillion-plus deficit is almost equal to the entire 1985 federal budget. Its cumulative national debt is $16.5 trillion—more than the nation's GDP. That's not counting the nation's unfunded Social Security and Medicare liabilities. Count those, and the debt adds up to $80 trillion—about eight times the GDP.
The $44 billion in sequester cuts for this fiscal year amount to what the government borrows every two weeks. (The sequester actually requires about $85 billion in cuts this year, but about half can be rolled into subsequent years.) This is chump change that any fiscally responsible president could shake out of his back pocket. Indeed, a 2011 Government Accountability Office report identified about $100 billion worth of government waste and duplication that could be eliminated without affecting anyone outside Uncle Sam's employ. But instead of doing the responsible thing, President Obama has taken to the stump and made the sequester a social justice issue.
He warns that if Republicans refuse him another tax increase and prevail with their "meat-cleaver" approach to the budget, there will be no first responders to help disaster-struck communities recover; prosecutors will be unable to put away criminals; schools will have to lay off teachers; parents will lose child care; and kids won't get vaccinations. As a warning shot, the administration began releasing detained illegal immigrants—a move that will not help the cause of immigration reform.
But if Obama wants social justice, how about recovering the bailout money before sticking it to taxpayers yet again?
In contrast to all the dithering over the measly sequester cuts, look back four years. Two different presidents and the Congress hammered out the nearly $500 billion financial rescue package within a matter of weeks, pumping huge infusions of taxpayer dollars into auto companies and Wall Street banks—some of whom didn't even need or want the money.
But according to ProPublica, a website dedicated to tracking the bailout, about $60 billion has still not been paid back. Nearly $6 billion is in the form of housing subsidies, and that is never coming back. But the rest is "invested" in company stocks and bonds and is therefore recoverable.
Consider General Motors, whose executives had the chutzpah to request multimillion-dollar raises a few weeks ago. Taxpayers still "own" about 19 percent of the company's stock. Asking GM to buy back that stock at the current stock price of $27—plus the 8 percent markup that it paid when the government sold its first tranche of GM shares—will raise close to $8 billion. Taxpayers will still have to swallow a loss, but they'll have to do that regardless of when the government sells. The same is likely to apply to other bailed-out entities. The recovery of this money will more than cover what Obama wants to raise through new "revenues."
It is offensive to hold basic government services hostage to tax increases, while at the same time lavishing billions on corporate entities. To be sure, at some point, these services must be cut, since this year's sequester is just a tiny down payment on what's needed to restore America's fiscal health. But it will go down much easier if taxpayers have confidence that corporate fat cats are not living it up on their dime.
Instead of exaggerating the dangers of the sequester, President Obama should be minimizing its pain. A good place to begin would be by chasing down the outstanding bailout dollars.
This column originally appeared in the Washington Examiner.