The Sequestration Obfuscation

By Gregory S. Casey, BIPAC President and CEO

Everyone is talking about the pending sequestration when only a handful of people actually understand what it is. I am not one of them. I know just enough to know what I just said. Luckily, I recently had breakfast with former Senator Phil Gramm who wrote the sequestration provisions into The Balanced Budget and Emergency Deficit Control Act of 1985. He and his devoted staff understand the concept. But even they have trouble getting their arms around the current version. And for good reason. The sequestration they wrote was designed to provide an orderly process for enforcing decisions made to control spending. The current sequestration is anything but an orderly process. This sequestration is a scapegoat for a lack of procedural discipline and smokescreen for failed leadership.

The first use of sequestration came not long after it was enacted, cutting an amount roughly proportional to that being forecast today. The sky didn't fall then and it might not fall this time either. A bigger sequestration was triggered again in 1987 but they opted out and because of that we have the deficits and national debt we have today. The fact is, no one really knows the effect this sequestration will have on programs, people or long term deficits and debt, but that hasn't stopped the demagogues from making a serious issue into political blame game.

Bob Woodward's column in last Friday's Washington Post sparked a new round of Washington he-said-she-said. Woodward suggests this sequestration was the President's idea – and it – and that the President's current attempts to lay the blame on the GOP is misleading at best – and it is. But that isn't the real point is it? Both political parties (and the Administration) share equally in creating the current sequestration and both political parties (and the Administration) dislike the pending outcome. Both sides view it as an ill advised meat clever – and it is – that should be replaced by thoughtful deficit reductions – and it should. Still, rather than focusing on fixing a sequestration no one says they want, the Administration has gone into high gear blaming Republicans while the GOP cries foul the Administration is not keeping faith with previous understandings the Administration says it didn't make. Blame is not a plan.  

The road here has been long and tortured with plenty of opportunity to lay blame along the way: a Presidential Fiscal Commission whose recommendations were ignored, an almost big-deal agreement blown up by ideologues from both political parties, a 2011 debt ceiling agreement with sequestration as enforcement, a failed super committee and a fiscal cliff agreement that raised taxes but didn't cut spending. The U.S. House passed two sequestration alternatives the Senate wouldn't consider. In fact, the Senate hasn't done anything at all, even though a bipartisan group of eight tried. Both sides (and the Administration) had opportunities and failed. Neither side (nor the Administration) has distinguished themselves. With the March 27th Continuing Resolution and the midsummer debt ceiling debate yet to occur, the current righteous indignation is not productive.

In the end, the current stalemate comes down to one thing: taxes. The Administration wants to raise more taxes on the "wealthy" and is using the theater of the sequester to squeeze the Republicans into submission. The Republicans contend taxes were already raised some $600 billion without a corresponding reduction in spending. If we checked the egos and put the purists outside, a compromise may lie in some of the ground already plowed.

Republicans correctly observe the $600 billion in new taxes on the "wealthy" were not accompanied by corresponding spending reductions. That is not a "balanced approach." Conversely, Republicans previously suggested they would accept about $800 billion in new revenues over the next ten years ($200 billion more than under the fiscal cliff) if – and only if – it was achieved through major tax reform, something both Senator Max Baucus (D), Chairman of the Senate Finance Committee and Congressman Dave Camp (R), Chairman of House Ways and Means Committee, are anxious to do. The deal may be to replace the current sequestration with a new agreement that requires the President to identify the $600 billion in spending reductions necessary to "balance" with the fiscal cliff revenues, while charging the tax writers with tax reform that raises an additional $200 billion in revenues but ONLY if the Administration identifies a corresponding amount in entitlement reductions. 

I submit the above proposition with zero belief that anyone will actually pay any attention. After all, nearly everyone in Washington is an expert in sequestration these days. My point is simply that this entire matter really isn't about sequestration at all. It has been twisted into a convenient excuse to posture and point fingers, and we unfortunately have once again been relegated to our seats to watch the political theater play out on the national stage.