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How Both Sides Botched the Sequester Fight

Ronald Brownstein

The repeated budget confrontations between Republicans in Congress and President Obama have grown so dysfunctional that they are endangering each side’s stated long-term priorities. Each combatant, by failing to more seriously pursue an agreement, is seeking a tactical advantage at the expense of larger goals.

Allowing this week’s automatic spending cuts, known as sequestration or the sequester, to take effect gives congressional Republicans some immediate political benefits. It allows them to bank measurable reductions in discretionary spending and to respond to the unstinting demands from their base (louder since the tax-raising fiscal-cliff agreement) to defy Obama.

But those modest rewards come at a high cost. Since the backlash against President George W. Bush’s “compassionate conservatism,” the GOP’s unquestioned top priority has been to reduce the federal government’s size and reach. Measured against that goal, the sequester is the budgetary equivalent of the Italian front during World War II: a bloody slog across a battlefield peripheral to the larger outcome.

Almost all of the impending $85 billion in cuts comes out of domestic and defense discretionary spending. Both deserve a hard look. But no serious analyst believes these discretionary accounts are the biggest budgetary threat. Discretionary spending makes up only about one-third of the budget, and the 2011 debt-ceiling agreement already tightly capped it.

Government’s long-term growth is driven mostly by rising costs for entitlements such as Medicare and Medicaid. Yet by using the sequester fight to escalate their conflict with Obama, congressional Republicans are diminishing their leverage to restrain that spending.

Responses over the past year to the United Technologies/National Journal Congressional Connection Poll consistently show that about four-fifths of Americans want to completely exempt programs such as Social Security and Medicare from any deficit reduction, even though most experts in both parties consider it impossible to stabilize the budget without constraining their growth. The only plausible chance to overcome that resistance would be for the parties to link arms to convince Americans that entitlement limits are essential to a balanced plan that demands sacrifice from all corners.

Yet by refusing to consider more revenue in any future budget deal, House Republicans are precluding a bargain with Obama that tames entitlements. It’s true that the president, buoyed by reelection, has rescinded entitlement-reform offers he considered during the debt-ceiling standoff in 2011—and that his tactical mistake in January of extending the bulk of the Bush tax cuts has complicated the politics by forcing him to ask Republicans to vote to raise taxes a second time. But if the GOP advanced a plan balanced between entitlement reforms and revenues, similar to the construct that Sen. Lindsey Graham, R-S.C., floated this week, Obama would face enormous, probably irresistible, pressure to bend. Just as in the 2011 standoff, Republicans are underestimating the value of a Democratic president willing to provide a heat shield for entitlement reductions that would face initial public resistance.

In this fight, Obama also appears myopic. While the first debt-ceiling collision with the GOP damaged both parties, polls show the public siding more with him than Republicans in the ensuing skirmishes. Surveys again show that more Americans will blame Republicans than Obama if the sequester blade falls.

Yet some prominent Democratic economists privately worry that the White House is winning battles and losing the war. In 2008 and 2012, Obama assembled a growing coalition of young people, minorities, and college-educated white women—a “coalition of the ascendant” that could provide his party a lasting advantage in presidential elections if it holds together.

But nothing will strain that coalition more than a recovery too tepid to provide greater opportunity, especially for hard-hit young people, African-Americans, and Hispanics. A Pew Research Center survey last week found that while Obama’s coalition was largely united behind his policies, it remained divided on his performance, with only about half of Hispanics and two-fifths of young adults approving of his handling of the economy. That’s why one senior White House adviser says that even though issues such as immigration and guns are dominating attention, the economy’s performance will matter most in shaping Obama’s political legacy. “If we do not focus on completing the middle-class project that he started,” the aide said, “then nothing else we do matters.”

These perpetual budget blow-ups are blocking that goal. Many factors are inhibiting the economy. But to the extent that one headwind is economic uncertainty linked to Washington’s inability to resolve the deficit—or, more broadly, to govern at all—Obama’s short-term political gain over the GOP is hampering his ability to deliver the kind of economic growth that could lastingly cement his coalition.

A big budget deal would be tougher to construct now than when the Bush tax cuts expired at the end of the year, or even when the congressional super committee with expedited powers considered these same options in 2011. But the two parties, not to mention the country overall, could still benefit from an agreement. The two sides are past the point where further confrontation will give either more leverage to achieve its goals. The fight, ominously, is now feeding on itself.