The problem with sequestration is that it’s an attack on demand. This explains why Republicans are telling anyone and everyone how wonderful it all is. Supply-siders to the one, the GOP thinks any consideration of the demand side of the economy is pretty much just Communism — when the consensus pre-Reagan was that it was the definition of market-driven economics. When spending gets cut, people don’t get paid. And when people don’t get paid, they don’t spend money. At it’s most basic, people spending money is the economy. So the sequester is a disaster in economic terms — a lot of deep cuts means a lot of people won’t get paid. This will not be good for the economy.
However, there are people out there on the left who just want to repeal the sequester and just drop the whole thing. We could certainly do that, it’s entirely legal and above board, and maybe we could even find enough squeamish Republicans willing to defect and get it done. But the thing is that when this whole thing was going by the monicker “fiscal cliff,” there were plenty of lefties arguing that going over the cliff was better than accepting the GOP’s alternative.
In a post agreeing with Matt Yglesias on the subject, Ed Kilgore writes, “[A]s recently as a few months ago the prevailing attitude among progressives is that sequestration, in the very unlikely event it happened, would be worse for the priorities of the Right than of the Left, since (a) it would hit defense spending pretty hard at a time when the most prominent Republicans (notably 2012 presidential nominee Mitt Romney) were calling for more money for the Pentagon, and (b) the most important progressive priorities, Social Security, Medicare benefits, Medicaid, SNAP (food stamps), and basic unemployment benefits, were placed off-limits.”
All of this is still true. This is still the fiscal cliff we’re talking about. It would be better if Republicans hadn’t thrown us all over the ledge, but it’s Republicans who are going to have the harder landing. By cutting spending as drastically as we have, we do reduce demand, but what spending is still there — i.e., the majority of it — is vastly more Keynesian and less supply-side than it was yesterday. Whether Republicans are celebrating today because they’re dumb or whether it’s for show, they did not win here. Quite the opposite. Spending for the military-industrial complex, which Republicans represent and defend, takes the biggest and deepest ax chop, while the social safety net, which Democrats represent and defend, barely gets its bangs trimmed. It’s not the best and most ideal time to cut military spending, but if spending must be slashed deeply, let the pentagon do the bleeding.
All this means that eventually Republicans will want to revisit this when they either realize the didn’t get the best deal or decide to stop pretending that they did.
“Sequestration is cuts liberals can live with but conservatives can’t, which should bring conservatives to the table to discuss a more balanced approach even though conservatives are more favorably disposed to cuts in the abstract,” explains Yglesias. If we just do away with sequestration, then nothing happens. We don’t get the deep spending cuts, sure. But we also don’t change the dynamic in Washington, which drastically needs changing.
Yes, Republicans are screwing up the economy with these wrongheaded demands for deep, immediate cuts in spending — but they would regardless. And starting today, two things will happen: we’ll be able to start talking about the “Republican economy,” because they’ve so taken ownership of it, and Republicans will start sweating as they realize that, once again, John Boehner just handed them a cockroach sandwich, told them it was ice cream, and they thanked him profusely for it.