Greg Sargent, the Washington Post’s lead liberal blogger, is never one to overrate the position of Republicans in Congress — indeed, it seems that he is constantly arguing that any Republican strategy is built on quicksand and misperceptions (he prominently suggested, for instance, that the GOP actually had no leverage in the debt-ceiling fight in January and would get nothing out of it. He turned out to be exactly right). So it’s especially interesting that he thinks liberals may well have lost an important battle over sequestration:
Maybe I’m wrong about this. But it’s looking more and more like progressives and liberals are going to be facing a tough question: Which is worse, indefinite sequestration or a grand bargain that includes serious entitlement cuts? Seems to me that sooner or later, major players on the left are going to have to stake out a position on this question. . . .
Obama, of course, will continue to push for a “grand bargain” that trades entitlement cuts for new revenues, on the theory that the bite of the sequester really is going to be felt over time — the Huffington Post details that job losses really are starting to happen — which could force at least some Republicans back to the table.
It’s unclear to me which of those two endgames is going to happen. But one thing that appears very unlikely is the preferred progressive endgame: As the sequester grows increasingly unpopular, Obama and Dems rally public opinion to force Republicans to replace it with a deal that combines new revenues with judicious spending cuts that don’t hit entitlement benefits. I’m just not seeing any way this happens.
That means that at some point, liberals may well be faced with a choice — should they accept the grand bargain that includes Chained CPI and Medicare cuts, and join the push for that, or essentially declare the sequester a less awful alternative, and instead insist that we live with that?
Sargent goes on to quote a couple of Democratic legislators who question whether this gloomy assessment is necessarily fair, but if it is, it’s certainly great news for the GOP, and will force Democrats to make an unpleasant and revealing choice. Obviously, neither accepting sequestration nor accepting a grand bargain that makes real entitlement cuts is remotely acceptable to relatively liberal members of Congress. One interesting difference, though, is that honest observers will admit that entitlement cuts can be done in a not terribly harmful way (and even a way more amenable to liberals than conservatives, if they involve, say, certain kinds of centralized Medicare reforms); while sequestration is by definition a lopsided, poorly designed policy that will have detrimental effects on some important federal functions. Liberals will have to choose, then, between what’s very offensive to the political interest groups they represent and breaks one of the core promises of the party (entitlement cuts) or what’s very bad domestic policy, and a big step in the wrong direction, for their priorities (sequestration).
As to how liberals got themselves in a situation where they must choose between blanket discretionary spending cuts or the kind of serious entitlement reforms Republicans have always said they really want, they made at least two miscalculations: First, Republicans were more willing, and more Republicans were willing, to cut defense than anticipated. In part, this isn’t a surprising result from negotiations among elder leadership that’s composed of Cold War–era congressman; plus, even since the deal was struck, the GOP caucus has almost definitely become more amenable to defense-spending cuts.
Second, after they realized Republicans had decided they would tolerate sequestration as a way to cut spending, Democrats then went to assuming that sequestration would have intolerable economic effects that would demand an alternative. Liberals’ general economic model, especially the key beliefs of the experts they trust, emphasizes the negative effects cutting government spending and raising taxes on the working class can have on a country’s fragile economy. They thus figured that the effects of the U.S.’s austerity, sequestration plus the expiration of the payroll-tax cut, would be devastating and palpable enough to force Republicans to the bargaining table to give up something they don’t want (delaying the cuts and/or replacing them with revenue). That hasn’t happened, although, like Sargent said, we’re still seeing how these cuts slow economic growth and affect people’s lives and it’s possible it still could.
#more#Continued slow government hiring or job cuts isn’t keeping the employment picture from improving, and spending-side austerity reducing growth by 0.3 percent or 0.4 percent of GDP isn’t going to be noticeable to most Americans, either. GDP and labor indicators are strong enough that (with the fourth quarter of last year being an exception) sequestration and the scheduled tax increases aren’t going to tip them into negative territory; whatever growth is being shaved off the top is just hard to explain as a problem to voters, and isn’t substantial enough for people to notice anyway.
I don’t think this is necessarily evidence that liberals’ original economic assumptions about fiscal multipliers or government spending’s effect on the economy are wrong — Alberto Alesina does, as he explained to the Washington Post recently. Rather, the private sector has been a bit stronger on its own than expected, and our austerity was, relatively speaking, just not that significant — it wasn’t enough to make liberals’ case against sequestration for them, and the amount of attention they devote to arguing for and explaining government’s potentially positive role in the economy, I think, was part of what led their assessment astray.
That said, to some extent they probably knew this and definitely know it now, which is why the White House has made significant efforts to make sequestration sound more dire in its effects on services and government effectiveness than it needs to be or has been, to embarrassing effect.