Las Vegas Sun

September 20, 2014

Currently: 80° — Complete forecast | Log in | Create an account

OTHER VOICES:

Sequester of fools

Another view?

View more of the Las Vegas Sun's opinion section:

Editorials - the Sun's viewpoint.

Columnists - local and syndicated writers.

Letters to the editor - readers' views.

Have your own opinion? Write a letter to the editor.

They’re baaack! Just about two years ago, Erskine Bowles and Alan Simpson, the co-chairmen of the late, unlamented debt commission, warned us to expect a terrible fiscal crisis within, um, two years unless we adopted their plan. The crisis hasn’t materialized, but they’re nonetheless back with a new version. And, in case you’re interested, after last year’s election — in which American voters made it clear that they want to preserve the social safety net while raising taxes on the rich — the famous fomenters of fiscal fear have moved to the right, calling for even less revenue and even more spending cuts.

But you aren’t interested, are you? Almost nobody is. Bowles and Simpson had their moment — the annus horribilis of 2011, when Washington was in thrall to deficit scolds insisting that, in the face of record-high long-term unemployment and record-low borrowing costs, we forget about jobs and concentrate exclusively on a “grand bargain” that would supposedly (not actually) settle budget disputes for ever after.

That moment has passed; even Bowles concedes that the search for a grand bargain is on “life support.” Let’s convene a death panel! But the legacy of that year of living foolishly lives on, in the form of the “sequester,” one of the worst policy ideas in our nation’s history.

Here’s how it happened: Republicans engaged in unprecedented hostage-taking, threatening to push America into default by refusing to raise the debt ceiling unless President Barack Obama agreed to a grand bargain on their terms. Obama, alas, didn’t stand firm; instead, he tried to buy time. And, somehow, both sides decided that the way to buy time was to create a fiscal doomsday machine that would inflict gratuitous damage on the nation through spending cuts unless a grand bargain was reached. Sure enough, there is no bargain, and the doomsday machine will go off at the end of this week.

There’s a silly debate under way about who bears responsibility for the sequester, which almost everyone now agrees was a really bad idea. The truth is that Republicans and Democrats alike signed on to this idea. But that’s water under the bridge. The question we should be asking is who has a better plan for dealing with the aftermath of that shared mistake.

The right policy would be to forget about the whole thing. America doesn’t face a deficit crisis, nor will it face such a crisis anytime soon. Meanwhile, we have a weak economy that is recovering far too slowly from the recession that began in 2007. And, as Janet Yellen, the vice chairwoman of the Federal Reserve, recently emphasized, one main reason for the sluggish recovery is that government spending has been far weaker in this business cycle than in the past. We should be spending more, not less, until we’re close to full employment; the sequester is exactly what the doctor didn’t order.

Unfortunately, neither party is proposing that we just call the whole thing off. But the proposal from Senate Democrats at least moves in the right direction, replacing the most destructive spending cuts — those that fall on the most vulnerable members of our society — with tax increases on the wealthy and delaying austerity in a way that would protect the economy.

House Republicans, on the other hand, want to take everything that’s bad about the sequester and make it worse: canceling cuts in the defense budget, which actually does contain a lot of waste and fraud, and replacing them with severe cuts in aid to America’s neediest. This would hit the nation with a double whammy, reducing growth while increasing injustice.

As always, many pundits want to portray the deadlock over the sequester as a situation in which both sides are at fault and in which both should give ground. But there’s really no symmetry here. A middle-of-the-road solution would presumably involve a mix of spending cuts and tax increases; well, that’s what Democrats are proposing, while Republicans are adamant that it should be cuts only. And given that the proposed Republican cuts would be even worse than those set to happen under the sequester, it’s hard to see why Democrats should negotiate.

So here we go. The good news is that compared with our past two self-inflicted crises, the sequester is relatively small potatoes. A failure to raise the debt ceiling would have threatened chaos in world financial markets; failure to reach a deal on the so-called “fiscal cliff” would have led to so much sudden austerity that we might well have plunged back into recession. The sequester, by contrast, will probably cost “only” around 700,000 jobs.

But the looming mess remains a monument to the power of truly bad ideas — ideas that the entire Washington establishment was somehow convinced represented deep wisdom.

Paul Krugman is a columnist for The New York Times.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy

Previous Discussion: 4 comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.

Only trusted comments are displayed on this page. Untrusted comments have expired from this story.

  1. If anyone is interested, go to the Huffington Post and click on the article "White House releases reports detailing sequester impacts by state".

  2. Sequestration is the Law that President Obama, his advisors, and Congress passed and approved. Now let me understand this. President and Senate were Democratic at time of passage of Sequestration. House was Republican. Okay, then 2/3 were Dems, and 1/3 Republicans. Sounds like republicans compromised with the majority party and now the majority party is upset. Tough! It's the law. Let er rip.

    CarmineD

  3. Bring it on. What alternate spending CUTS does anyone want--you can cut $xxx,XXX from a Department while allowing the cuts at differing level within different agencies and programs. The small trims these cuts will need are de minimus and don't warrant the hysteria.

  4. As Dr. Krugman should know if he understands government budgeting, and if he doesn't, this is it: Most Federal Agencies affected by Sequestration will have to redo their budgets for the rest of the fiscal year through September 30, and submit to OMB [Office of Management and Budget] for the record and approval. This will take about two months so the impact won't be felt until late April and early May. The budget categories that will be affected [read reduced] are business travel, professional training, conferences and off-site meetings, possibly supplies, and not filling vacant positions resulting from attrition. Operations and readiness should not be touched, at least for program agencies and departments. Not for the $85 Billion between now and the end of the fiscal year.

    CarmineD