Obama's Evolving Sequester Strategy

President Obama’s sequester strategy has progressed through several phases:

1. Stand fast with his base in refusing any change to entitlement programs and demanding further tax increases on the rich by elimination of loopholes. That has worked several times; why not again? Plan A failed when the Republicans were surprisingly willing to accept arbitrary cuts to the military, allowing sequestration to go into effect.

2. Build up the story that this Republican idea came about because Boehner and his Tea Party allies will not accept a “balanced approach.” Plan B failed when Bob Woodward loudly proclaimed that the sequester was a White House idea, and John Boehner repeatedly made the point that Obama had received his $650 billion in (10 year) tax increases in January. It also ignored the fact that the House has passed two bills to provide a more flexible way of applying the cuts – bills that the Senate ignored and the White House threatened to veto.

3. Scare the public – and the Republican House members – with a litany of all the bad stuff that will happen. Plan C failed when planes didn’t fall from the sky. Obama’s message has changed to the gradualism of the pain, and the administration is doing what it can to make it real by doing things such as releasing thousands of illegal immigrants, furloughing meat inspectors, cancelling White House tours,  and holding back on military deployments. But the reality is that we can absorb cuts of 2.4% on a $3.6 trillion budget without calamity, no matter how hard Janet Napolitano and Ray Lahood try.

4. Scare the public and the markets with fear that the Republicans will shut down the government by not passing another “Continuing Resolution” to authorize keeping on when the current resolution expires on March 27. Plan D failed when the House passed a bill on Wednesday to authorize spending through September at sequestration levels, with language that allowed some judgement as to how the military cuts would be implemented. The Senate will apparently pass it, and Obama will reluctantly sign it. (These Continuing Resolutions are necessary because for years the Senate and Obama have not done legally required budgets.) And the markets? Record highs.

What has the Commander in Chief been thinking? That he could engineer a Democratic capture of the House in 2014 by blaming the Republicans for gridlock and a loss of government services?  He seems, however, to have had a different result.  A public which once believed Obama’s claim that he could extend free healthcare to 30 million people without costing anyone “one thin dime” (a $6.2 trillion error, according to the GAO), is catching on to the flim flam. With the Washington Post giving Obama Pinnochios for claims about who proposed the sequester, layoffs of teachers, and paycuts for Capitol Hill janitors some press integrity has returned, and the President’s approval ratings have dropped well below 50% with about equal numbers holding Obama and the Republicans to be at fault.

While it feels good to have some financial discipline return, the reality is that year over year spending has flattened out but we remain at the heightened levels which began with the stimulus plan in 2009, and the heavy lifting of entitlement reform, tax reform (lower rates; fewer deductions; corporate and individual), and healthcare cost containment remains ahead. If Obama continues to pursue campaigning over governing – and he likes to do what he is good at while ignoring what he’s not –  progress on the big stuff will remain elusive until 2016.


This week’s video is an effort by Joe Scarborough to rehabilitate himself after his 2012 sell-out to Mika, by going after Paul Krugman.


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