Think Of Sequestration As An Unhealthy Fad Diet


Mar 11, 2013

Written by Mary Buffett

When I think of the current sequestration, I think of other times when easy fixes have masqueraded as tough solutions. When I’m asked about it at conferences, I compare sequestration to an unhealthy fad diet.

We’ve all been there before. We’ve taken that tough look in the mirror and cringed. We wonder how we went to seed but promise we’ll do better. We’ll get out more and power walk around the neighborhood. We’ll join a gym and stick to it. Within time, the pounds gradually slip away and we’ll gain new habits that will travel with us for the rest of our lives.

Or we can go a different direction. Others pick up a copy of The National Enquirer, cut out the latest article about the “Grapefruit Diet” and order the latest diet pills that show the stunning weight loss. For a short time, the weight may actually disappear. However, weight loss without any behavioral change turns into another yo-yo diet. Within a short period of time, the weight returns.

Sequestration is yet another in a long series of fad diets that Congress has produced because the Republican leadership is unable to move beyond their ideology and solve things in practical terms.

It’s brinksmanship over and over and over again. The sea change came after the 2010 midterm elections and Tea Party misbehavior during The Debt Ceiling Crisis of 2011 caused a huge drop in the Dow, a downgrade of our national credit rating, and taxpayers ended up footing a bill of $18.9 billion in additional costs for the delay in raising the debt ceiling. A deal was crafted that kicked the can until after the election, which few Republicans expected Obama to win.

Then we arrived at the fiscal cliff in January 2013, right after a stunning Obama win. After weeks of more partisan wrangling, Republicans surrendered again and rate for some high earners returned to Clinton era marginal rates. However the debt ceiling increase remained untouched and we find ourselves in Week 1 of the sequestration with another moment of high drama just around the corner.
Some might quietly applaud these cuts because we’ve been catastrophe-free. Planes have not fallen from the skies, the countryside has not been invaded from the North or South but everybody concedes that this is no way to run a railroad. There will come a time when the cuts will erode policy.

Has it always been that way? Until the end of the Carter administration in 1980, the total amount of debt between the times George Washington was sworn in to the time Jimmy Carter left amounted to only $1 trillion. With Reagan tax cuts and the S&L bailout during the Bush years, the debt zoomed upwards. During the Clinton years, as the president produced record budgetary surpluses, there was talk that the debt might be retired within 10 years.

However, we know what happened next. George W. Bush passed tax cuts that evaporated the Clinton surpluses. Then we had two wars and Bush passed Medicare Part D, a huge addition to the existing senior health care program without a clue on how to pay for it. There were no changes in the tax code for any of these huge expenditures and this was before the collapse of 2008.

We’ve been there before. The problem with sequestration is that there are enough smart staff members who can find enough loopholes work around whatever artificial limitations Congress has constructed. The best evidence was The Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act of 1985, which was supposed to reduce deficits that Ronald Reagan piled up during the 1980s. After it was struck down in the courts and subsequently rebuilt, it had little or no effect. Like sequestration before it, Gramm Rudman Hollings was another fad diet which had no effect on the structural budget deficits of the period.

Building real change takes something more than a fad diet. It takes commitment and the courage to make it happen. Building an artificial construct without changing one’s core behavior always ends badly. If it’s a diet or even fixing the national economy, failing to create a change means you ended up bloated and broke.

There is a sensible answer will gradually allow us to grow out of our current hole. Deficit spending during the Great Recession saved things from getting worse. Now that the economy is coming back, more tax revenue will flow into federal and state coffers. The national emergency that precipitated several bailouts is now in the rear view mirror. Now that two overseas wars are winding down, we can rethink defense priorities for the 21st century.

How it’s usually done: Most debt-limit increases consist of two or three sentences and are passed without much of a ripple of interest. I find it ironic that most of the largest screamers on the Republican side who moan about the size of the debt were strangely quiet when George Bush ran up an ocean of red ink.

What’s disturbing is that these very same Republicans who were silent are now willing to put a gun to the head of the recovery. The House has been playing a dangerous game of “chicken” that has, at times, threatened to derail the fragile recovery. Yet, during the five debt limit increases passed during the Bush years (between 2002 and 2007), John Boehner and Eric Kantor approved them all and additional $4 trillion in red ink appeared without as much as a squeak. However, with a Democrat in the White House, their tune would change and politics has trumped policy.

So where do we go from here? Long before we had basic cable, giants like Lyndon Johnson and Ev Dirksen would meet in private. They were also wise enough to know that you don’t wreck the national economy over procedure. Deals were cut in the Oval Office and the business of Washington continued on as normal. Great bills came out of those gatherings and the aroma of smoke and scotch meant serious men were doing serious things.

Some say that Simpson-Bowles might be the light out of the wilderness. It’s a clearly shock to the system and it dramatically repositions the relationship between the government and the taxpayer. Regardless of its critics (which include both Paul Krugman on the left and Grover Norquist on the right) Simpson-Bowles takes a serious look at some long term budgetary planning. It also says that after years of building a deficit hole, we will spend decades paying for more and getting less. Sadly that flies in the face of today’s budgetary reality, where somebody else is left holding the tax bill.

We may get something else, too. As we look at the improvement of the economy, the deficit is now falling faster than people realize. In fiscal year 2009, pumped with a variety of stimulus and bailout plans, the budget had a deficit of $1.4 trillion, which was roughly the amount of Clinton’s entire fiscal 1994 budget. With an updraft in the economy, it is quite possible that the deficit in the fiscal 2014 budget might be half of its current projection of $667 billion. We could be closer than we think when it comes to balancing the budget. Of course Republicans will try to swoop in and take credit when they actually sat on their thumbs, just like former Speaker Gingrich continues to do with President Clinton’s surpluses.

However, today, everything is public and until we get legislators to think beyond the stridency of either side’s talking points, compromise is equated with weakness. The only combinations that will align the budget gap are revenue enhancements through loophole closures and flattening the spending curves. It also means that legislators will have to deliver some tough news to their friendly special interests because we are not living in normal times.

When we get to that point, we’ll begin to see some real leadership, not a series off fad diets that roll of the assembly line.

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