The crescendoing drumbeat in Washington over the sequester—$85 billion in federal spending cuts scheduled to start a week from today—obscures a key point: the sequester is only Act 2 in a 3 act fiscal play set up by President Obama and congressional Republicans over the past two years.
Act 1 was the “fiscal cliff” at the end of 2012. That was the expiration date of the Bush tax cuts (which had been extended for two years in a December 2010 deal that generated a second, largely unheralded, fiscal stimulus of about $400 billion). It was also the original date for the sequester to take effect after Congress 1) failed to negotiate a deficit reduction compromise and 2) the “supercommittee” failed to negotiate a deficit compromise.
Why no compromise? Because as Jonathan Chait reminds us, unbending contemporary Republican orthodoxy is that “(e)very other fiscal priority must give way for the overriding goal of reducing marginal tax rates.”
Republicans “lost” the fiscal cliff fight because the end result was $600 billion in additional tax revenue over the next decade. That makes them all the more determined to “win” the next fight, i.e., the sequester.
But one month after the sequester goes into effect (as seems increasingly likely), Congress (having failed to pass a FY 2013 budget) will have to pass a new continuing resolution before April or the entire federal government will shut down (except for “essential services”).
Republicans may “win” by forcing the sequester to go into effect next week, but the howls of protest from the citizenry—who don’t share the peculiar ideological fixations of today’s Republican Party—are likely to set up a situation in which Republicans will lose the climactic battle at the end of this 3 act drama they’ve inflicted on the country.
Crossposted at: http://masscommons.wordpress.com/