Economy & Budget

Call Obama’s sequestration bluff

Call Obama's sequestration bluff

WASHINGTON — For the first time since Election Day, President Obama is on the defensive. That’s because on March 1, automatic spending cuts (“sequestration”) go into effect — $1.2 trillion over 10 years, half from domestic (discretionary) programs, half from defense.

The idea had been proposed and promoted by the White House during the July 2011 debt-ceiling negotiations. The political calculation was that such draconian defense cuts would drive the GOP to offer concessions.

It backfired. The Republicans have offered no concessions. Obama’s bluff is being called and he’s the desperate party. He abhors the domestic cuts. And as commander in chief he must worry about indiscriminate Pentagon cuts that his own defense secretary calls catastrophic.

So Tuesday, Obama urgently called on Congress to head off the sequester with a short-term fix. But instead of offering an alternative $1.2 trillion in cuts, Obama demanded a “balanced approach,” coupling any cuts with new tax increases.

What should the Republicans do? Nothing.

Republicans should explain — message No. 1 — that in the fiscal-cliff deal the president already got major tax hikes with no corresponding spending cuts. Now it is time for a nation $16 trillion in debt to cut spending. That’s balance.

The Republicans finally have leverage. They should use it. Obama capitalized on the automaticity of the expiring Bush tax cuts to get what he wanted at the fiscal cliff — higher tax rates. Republicans now have automaticity on their side.

If they do nothing, the $1.2 trillion in cuts go into effect. This is the one time Republicans can get cuts under an administration that has no intent of cutting anything. Get them while you can.

Of course, the sequester is terrible policy. The domestic cuts will be crude and the Pentagon cuts damaging. This is why the Republican House has twice passed bills offering more rationally allocated cuts. (They curb, for example, entitlement spending as well.)

Naturally, the Democratic Senate, which hasn’t passed a budget since before the iPad, has done nothing. Nor has the president — until his Tuesday plea.

The GOP should reject it out of hand and plainly explain (message No. 2): We are quite prepared to cut elsewhere. But we already raised taxes last month. If the president wants to avoid the sequester — as we do — he must offer a substitute set of cuts.

Otherwise, Mr. President, there is nothing to discuss. Your sequester — Republicans need to reiterate that the sequester was the president’s idea in the first place — will go ahead.

Obama is trying to sell his “balanced” approach with a linguistic sleight-of-hand. He insists on calling his proposed tax hikes — through eliminating deductions and exemptions — “tax reform.”

It’s not. Tax reform, as defined even by the White House’s own webpage on the subject, (BEG ITAL)begins(END ITAL) with lowering tax rates. It then makes up the lost revenue by closing loopholes.

Real tax reform is revenue neutral. It’s a way to clean the tax code by eliminating unfair, inefficient and market-distorting loopholes on the one hand while lowering rates to stimulate economic growth on the other.

Obama has zero interest in lowering tax rates. He just got through raising them at the fiscal cliff and has made perfectly clear ever since that he fully intends to keep raising taxes. His only interest in eliminating loopholes is to raise more cash for the Treasury — not to use them to lower rates.

That’s not tax reform. That’s a naked, old-fashioned tax increase.

Hence Republican message No. 3: The sequester is one thing, real tax reform quite another. The sequester is for cutting. The only question is whether it will be done automatically and indiscriminately — or whether the president will offer an alternative set of cuts.

Then we can take up real tax reform. Reprise the landmark Reagan-Tip O’Neill-Bill Bradley tax reform of 1986, a revenue-neutral spur to economic growth and efficiency, and to fairness for those not powerful enough to manipulate the tax code.

The country needs tax reform. But first it needs to rein in out-of-control spending. To succeed in doing that, Republicans must remain united under one demand: cuts with no taxes — or we will let the sequester go into effect.

The morning after, they should sit down with Obama for negotiations on real tax reform as recommended by the president’s own Simpson-Bowles commission: broaden the base, lower the rates.

Any time, any place. Geneva, perhaps? The skiing is good. Skeet shooting too.

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  • 1Mojo_Risin9

    Charles has it correct, republicans should do nothing, just sit back and let Baraka drift with the currents of bankruptcy and mandatory cuts! But when was the last time the republicans have taken a sage pundits advice, I can’t recall, they always cave, always!!!

    Boehner will capitulate on something, McConnell will likewise unfurl the pretty bow on his pink underwear and nothing will be settled or resolved!!! On to the next crisis, chasing the can and the looming cliff!

    Omugabe, a complete incompetent, as unqualified for the decision making required for the job of POTUS there ever has been and he has his opposition completely flummoxed, unable to muster the backbone to save the Nation and leaves you with the question: Maybe they’re all unqualified for their jobs??!!

  • Niniane

    Obama got his tax hikes, but the Demoncrats and the WH occupier have proposed no spending cuts at all. Meanwhile, we spent $1.4 billion on the upkeep of Obama last year, and have wasted countless millions in giving grants to study cocaine-laden monkeys, billions in green energy projects, billions in foreign aid to countries which hate us. Meanwhile, more taxpayers are losing their jobs due to the upcoming Obamacare, but that is not a problem as Bernanke keeps printing more devalued dollars.

  • JAS64

    Start with defunding the EPA. They are the 3rd highest spender of tax revenue.

  • Sturmudgeon

    Good Luck with that! Self-reliance is NOT what this admin. is about.

  • DBGS

    The

  • http://www.therightcommentary.com/ Dave

    The one thing you can depend on with the current crop of gutless GOP leaders, they will always let a crisis go to waste. They will fumble, tumble and mumble themselves into defeat.

  • globalcrap

    Amen

  • DBGS

    The POTUS never ceases to amaze me! He got his tax increases with no cuts in the Fiscal Cliff. The Congress has already submitted 2 plans for reconciling the Sequestration, but good old Harry and the POTUS chose to ignore them Now the POTUS is asking for help with a “balanced approach”, equal revenue for equal cuts! He got a revenue increase in the Fiscal Cliff negotiation, let’s start with cuts that equal those, and then move on! I sure do hope that all of what they refer to as the “uniformed voters” who put the Bozo back into office pay attention to what he is trying to do now. I also hope, maybe in vaine, that the GOP holds their ground this time!

  • 1Mojo_Risin9

    A sycophantic, Obonehead compliant MSM is a major stumbling block to advancing even a modicum of fiscal sanity!!! The media just won’t report the truth about the guy and his idiotic policies and what they — MSM — don’t realize is they’re gonna go down in that “Ship of Fools” they are sailing 1st class on, they’ll be swimming with the fishes!!!

  • realist

    Where does our Constitution authorize government control over our lives?

  • http://www.facebook.com/people/Douglas-Lynn/100002170303577 Douglas Lynn

    I could not agree more with Charles. Spending cuts are almost always good. The idea that we cannot cut 120 billion out of a 3500 billion budget is outrageously absurd.

    Every deficit dollar we spend is a lie about where our economy really is. A recovery created and maintained by deficit spending is a lie. Deficit dollars should not be counted as part of the national GDP.

  • Dukehoopsfan

    Well said Dr. K. You know it, we know it, it’s really pretty clear. Sadly, the republican establishment is lacking in courage and conviction. The fact is, the dems are better at playing chicken and the republicans are afraid to stand up to them.

    They currently have an advantage and their fear is stopping them from siezing the day.

  • http://sherri-gerald.myopenid.com/ Sherri Gerald

    It then makes up the lost revenue by closing loopholes. http://www.Hugedealprofit73dollarperhourontheinternet.qr.net/j7ik/4a-4d8=jVRAtYIYGPs3g&N

  • http://www.facebook.com/terry.porter.5477 Terry Porter

    If Congress would just cut all the departments/agencies/ line items that the GAO has found waste in the last two years and cut them by the wasted amounts, they could cut over $300 billion per year! They all could even say they have cut waste in DC! That is more than they are fighting over!

  • http://conservativetimes.org/ Local_Ale

    There are no ‘real cuts’ coming, just minor changes to the rates of growth, with some shuffling of how current operations are funded. Think of it as a minor two year freeze, but not quite that.

    It does nothing to close the budget deficit. There will be a series of orchestrated stories about how the funding “cuts” hurt, but, for example, the Pentagon brass will keep their golf courses and swinger parties with mistresses.

    Pay/bennies for the average soldier will be cut as an act of political gamesmanship.

    There will be no cuts and even the awful Krauthammer, Walter Mondale’s former speech writer, calls for tax hikes at the end of his column.

    Anything but cut spending with these people.

  • LoneWolf

    Obama has bragged about the cuts he signed into law, the sequester, and he threatened to veto any attempt to change the cuts. Now, he wants to replace those same cuts with more taxes. Hahahahaha, never gonna happen Mr Spender-in-Chief!

    He spent $2,100,000,000,000 on the China credit card, something our grandchildren will be forced to pay for, and now he doesn’t want to honor the cuts that allowed him to spend all that money.

    The man has no honor.

    Next, he’ll be claiming that Americans agree to his common sense balanced approach of new taxes and minor cuts, because the rich yet again need to pay their fair share. That would be yet another lie, as 83% of Americans want cuts amd not new taxes.

  • http://www.facebook.com/aemoreira81 Adam Moreira

    If Obama is really serious about avoiding sequestration – he should be coming up with cuts equal to 125 percent of spending outside of the military (not counting debt servicing).

  • David Muehlberger

    “broaden the base, lower the rates”

    this is all you need to know, but John Henry couldn’t pound this basic premise into the president’s head

  • aballer1515

    Defund – No, Eliminate all together – yes! But I get your drift.

  • Patriot41

    Agree with you on this Charles, in that the GOP holds up the deal that they made with Obama last year. The art of the deal as the Donald would say, is to make a profit and in this case, that profit should come about through reduction in spending. Thus far, that deal the GOP cut with Obama, costs the taxpayers of this nation an additional $1.6 trillion dollars more, then what our govt.. could have functioned on. If the GOP does not hold to that deal, it will costs them a lot more, come the next election cycle. All the GOP has to do now, is live up to their end of the bargain and see to it, that excessive spending is reduced by the amount agreed to.

    It is my belief, that this is a very good time for the GOP to honor their words to the citizens of this country, by using their leverage to push through an annual balanced budget law, without one, our fiscal crises will never be resolved. In doing so, they would also eliminate the threat of our govt..credit ratings be further downgraded.

    This is also a very good time to deal with this nation’s tax codes, which go well beyond any logic or understanding. Tax loopholes have created one of the worst problems this govt.. faces, when trying to assess exactly how much income revenue will be available when establishing a balanced budget. Without corporate, small business and individual tax loopholes, a fixed rate income tax for all concerned, would resolve the mystery of incoming revenue. In fact, by using such methods, taxes for all concerned, could be reduced.

    I do not oppose revenue cuts to the Defense Department, as I truly believe that it has gone well beyond it’s intended purpose, taking this country into endless and unnecessary wars, that the U.S. has no business being involved in, as a sovereign nation. Over the last twenty years, we have wasted trillions of taxpayer dollars and have done little to promote world peace, through our unauthorized world police mentality. That costs will continue to escalate for decades, just providing proper medical care to the thousands of our troops who have been maimed while serving their country. That fact does not even consider the billions that taxpayers spent on foreign aid, rebuilding other countries that we have been involved with. All of that money should have been spent on repairing and building our own infrastructure for the taxpayers who have been footing the bills.

    If the agreed upon cuts do not take place this Spring, the sequester needs to take place now!

  • terry1956

    There is one part of the first amendment ( also state constitution , county and town charter counterparts) that is usually over looked and that is the petition clause.
    We know that instead of the federal level most everthing the federal government does can be done better by the states, counties, communities , the private sector and the people via commerce, mutual aid and charity.
    That includes obligations to our senior, disabled and widowed citizens.
    The states and the people should inform their members of congress and congress in general of this with a demand to opt out of most federal programs coupled with the demand to also opt out of any increase in non defense related increases in debt obligations for the state as well as opting out of the federal social security, medicare and unemployment taxes in the state.
    the remaining federal taxes at the current or lower rates is more than enough to fund a constitutional federal government without running red ink.
    The direct federal income tax also is replusive and needs to be elimnated but the federal payroll tax and the ever increasing debt burden is even worse especially when it makes no sense at all.
    the federal payroll tax kicks people, a business and the self employed worse when they are down plus congress rips off employees and seniors by changing the terms of social security and medicare while also annually understating increases in the cost of living and micro managing their healthcare resulting in a lower quality of care.

  • justinwachin

    I say let the sequester kick in. Most Americans saw their taxes go up on New Year’s Day. Sorry, Mr. President, the tax increases for 2013 have already been enacted. It is now time to slash spending.

    The only real discussion at this point is where to make the $1.2 trillion in cuts. We have kicked the can down the road long enough. It is time to stop kicking. The budget sequester will finally mark a real attempt to reduce reckless government spending.

  • tartansailor

    Congress and the president really, really need a wake up call.
    We are sick and tired of the debt, and the bull$%it.

  • Emerson8

    The only problem with the article is the Dr’s talking a out tax reform after the sequester. Everyon, EVERYONE knows, that reform would require more taxes for the Marxist-in-Chief. Let thevsequester happen and just be done with it, period. Everyone, EVERYONE, already had their taxes raised by every dang one of these morons, we simply can’t trust hardly any of them (great job Boehner, getting a DEMOCRAT tax bill passed in YOUR house, you jerk!) Let the sequester happen, then be done, PERIOD! They CANNOT be trusted!

  • Maximus_Legitimus

    Here’s the video of obama in November of 2011 where he promises he will veto any attempt by Congress to stop the sequester.

    http://www.youtube.com/watch?feature=player_detailpage&v=VqD2h7e_MLg
    So, does this mean that obama will veto himself? I can’t keep up with his promises and lies………………..can you?

  • Maximus_Legitimus

    Here’s the video of obama stating he will veto any attempt to stop the sequester in November of 2011.
    http://www.youtube.com/watch?feature=player_detailpage&v=VqD2h7e_MLg