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The Sequester Was Always About Raising Taxes



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President Obama’s proposal to delay the $1 trillion sequester with a “balanced” package of spending cuts and tax increases should come as no surprise. Since its initial conception back in August 2011 (it was Obama’s idea), the sequester has always been viewed by Democrats as a mechanism with which to exact higher taxes from Republicans. However, at this point, that strategy appears likely to fail.

From a post I wrote at the time:

Senate Majority Leader Harry Reid (D., Nev.) warned that if new tax revenue was not included in the [super]committee’s proposal, the [sequester would be enacted]. Many Democrats are outraged that the recently-passed bill included no new taxes and are insisting that the [super]committee produce a plan that does. “It’s the only way you can get a larger handle on the deficit problem,” said Sen. Chuck Schumer (D., N.Y.). Schumer said the inclusion of a trigger that involves “very, very, very deep” cuts to defense spending, was something that “brought Democrats around” in support of the final deal. Such a trigger, he said, was akin to “sharp swords hanging over the heads of both parties.”

“Hopefully they can bring both sides together to realize coming to a compromise is better than the trigger being implemented,” he said. “That’s the point.”

Sen. Ben Cardin (D., Md.), a senior member on the Senate Budget Committee, was less diplomatic. He said Democrats would have significant leverage going forward that would allow them to press for higher taxes, which he called “the number one priority,” and suffer relatively few consequences if the [sequester is enacted]. “Those of us who are for revenue I think are in a pretty strong position because we’re not too concerned, as we were with the debt ceiling, that if we don’t reach an agreement it will be devastating to our priorities,” he said. 

The assumption was that, because national security is apparently less of a priority for Democrats, the GOP would ultimately cave and agree to raise taxes in order to avoid the sequester, half of which would come from the defense budget. That is why the White House was somewhat baffled during the fiscal-cliff negotiations when House Speaker John Boehner (R., Ohio) did not come to the table with an alternative to the sequester, specifically the defense portion.

Obama ultimately got $600 billion in new revenue as part of that final deal, in the form of rate hikes on wealthy earners. Now, he’s insisting on more, and has said he will oppose any effort to replace the sequester that does not involve further tax increases. Unfortunately for him, Republicans appear willing to let the sequester take effect, and insist that any effort to raise taxes is “dead on arrival.”



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