After listening to National Economic Advisor to the President Gene Sperling this morning, I think I have a better understanding of at least one reason why we ended up in this sequestration mess, and why no one in Washington can seem to figure way out of it. The White House didn't know who it was dealing with on the Republican side of the negotiating table during the "fiscal cliff" fiasco. Even more distressing, now that the sequester is in effect, is the possibility that the White House still doesn't know who it's dealing with.
Sperling was one of this morning's speakers at "The Economy Summit" in Washington, DC, sponsored by The Atlantic magazine. Sperling's interview with Editor in Chief James Bennett followed a panel titled, "Debating America's Addiction to Debt & Debt Debates: Which Matters More?", featuring Robert Kuttner of The American Prospect, economist Craig Alexander of TD Bank, Paul McCully of the Global Interdependence Center, Yves Smith from Naked Capitalism, and moderated by Financial Times columnist Edward Luce — who also acted as a rhetorical stand-in for Fix the Debt's Maya MacGuineas, who arrived late.
Almost as soon as he sat down, Sperling illustrated something Kuttner stated during the previous panel: the biggest problem in Washington right now is that there too much consensus between Democrats and Republicans on "deflationary strategy in a fragile economy." Kuttner's statement was in answer to the question that kicked off the panel: Are we obsessing about debt? Do we need to go to zero?
Kuttner and the rest of the panel, until Maya MacGuineas' arrival, were almost in perfect harmony in response to those questions Yes, we are obsessing about debt. And, no, we don't need to "go to zero." The biggest threat to our fragile economy and barely-breathing recovery is the austerity hysteria that develops when deficit fever goes untreated. As we've seen in Europe, austerity kills economic growth, increases unemployment, plunges economies into recession, and increases economic pain — all without actually lowering deficits. No one on the panel disagreed that the deficit would need attention in the future, after the economy is in better shape, bit the panel agreed with the IMF and 350 economists: deficit fever least to austerity hysteria, and austerity bites. Hard.
The tone changed when Fix the Debt's Maya MacGuineas arrived and critiqued what she called the belief that Washington "can only do one thing at a time." What the country needs, MacGuineas said, is plan that puts the debt on a "sustainable path" without derailing the economy, and in her next breath went on to claim that "entitlement" (aka Social Security, Medicare, Medicaid) are "driving the debt." MacGuineas wrapped up by saying that we need a 10-year-plan that includes "entitlement reform." That 'entitlement reform" "doesn't have to take place now," but it's necessary to appease the Confidence Fairy MacGuineas invoked in one of her last remarks, "One thing we don't have in the economy is the stability of knowing future tax & spend policies."
Too Much Consensus
If I'd closed my eyes before the panel ended and Sperling took the stage for his talk, titled "A Health Economy Equals Fiscal Responsibility & ," I might have thought that MacGuineas was still speaking. Almost as soon as he sat down, Sperling declared that Washington needs to "walk and chew gum at the same time," and come up with an economic plan that "does more than one thing."
Sperling said "We need an economy where the circumstances of your birth doesn't determine the outcome of your life," and the country needs an economic plan that secures certain goals — securing the middle class, protecting retirement, and "putting more demand into the economy right now" — and bringing down the deficit without interfering with the goals of increasing demand and investment right now. In keeping with the title of his talk, however, Sperling's remarks made it clear that deficit reduction ("fiscal responsibility" and "entitlement reform" decoded) got top billing.
In the middle of a remark linking the coming tide of retiring "Baby Boomers" to the need for deficit reduction, Bennett stopped Sperling with a pointed question: "Would you push for entitlement reform, even without pressure from the Republicans?" Sperling's answer was immediate and unqualified: "Yes."
I admit that at this point, I look over my shoulder to confirm that Maya MacGuineas, who stuck around to hear Sperling's interview, was indeed not still on the stage. Sperling's response so nearly echoed hers that I needed some confirmation that I really was just hearing the same thing from a different person. I wished Sperling had been in the room moments before, when Robert Kuttner spelled out that the cause of the current deficit and the biggest threat to our children's future is the "lousy economy" that's a direct result of the financial crisis, and not Social Security and Medicare.
Kuttner's point was lost on MacGuineas, but I wondered if it would have been lost on Sperling, too, given how quickly and easily he segued from deficit reduction to entitlement reform. To his credit, Sperling laid some of the blame for the current deficit on the revenue gap caused by "two different tax cuts that were not offset" during the Bush era. He added that "Medicare and social security among the most important things government has done to ensure a secure middle class," and "Those of us who care about SS and Medicare should care about making sensible reforms to keep them here and strong." But somehow "sensible reform" was all about Social Security and Medicare.
The White House Doesn't Know Who It's Dealing With
Bennett's next question to Sperling was even more revealing: "Did you guys miscalculate on the fiscal cliff, thinking that prospect of defense cuts wd force a deal?"
As I pointed out, sequestration was born out of the fiscal cliff debacle. The idea originated in the White House, but was embraced by Republicans.
So, the concept of sequestration began with the White House. But that doesn’t get us all the way to where we are today, just days away from suffering a major, self-inflicted economic wound. If the Obama administration gave birth to this bad idea, Republicans nursed it, fed it, gave it legs, and taught it to run.
It’s hard for anyone except the most committed conservative conspiracy theorist to think that the Obama administration actually wants the sequestration cuts to happen. Sequestration, as originally conceived, was never intended to take effect.
Now, Congress, back in 2011, also passed a law saying that if both parties couldn’t agree on a plan to reach that $4 trillion goal, about a trillion dollars of additional, arbitrary budget cuts would start to take effect this year. And by the way, the whole design of these arbitrary cuts was to make them so unattractive and unappealing that Democrats and Republicans would actually get together and find a good compromise of sensible cuts as well as closing tax loopholes and so forth. And so this was all designed to say we can’t do these bad cuts; let’s do something smarter. That was the whole point of this so-called sequestration.
Unfortunately, Congress didn’t compromise. They haven’t come together and done their jobs, and so as a consequence, we’ve got these automatic, brutal spending cuts that are poised to happen Friday.
The sequestration cuts were designed to be so incredibly stupid, painful and dangerous that lawmakers would be forced to come to some kind of agreement in order to avoid them. Unfortunately, that’s not how it went down.
It was enough, then, to make me wonder if the Obama administration knew who it was dealing with at the negotiating table — not John Boehner, but a tea party faction with an appetite for destruction that Boehner was to weak to confront, and thus failed to lead his caucus.
Sperling's answer confirmed for me that the White House didn't know who it was dealing with them, and perhaps still doesn't know who its dealing with now. Sperling answered that "the sequester is not a victory for anybody's priorities … the sequester is not a win for Democrat's or Republicans."
I had to suppress a groan.
Really? "Not a win"? From a guy who's speaking at a conference where "tax pledge" author Grover Norquist is also slated to speak?
I'm not claiming to be smarter than the president's economic advisor, but the sequester is a total win for a for the ultra-conservative Republicans who want to shrink the government so badly that even defense cuts don't bother them.
The sequester is not an “orphan” in that old proverb about failure, but it’s not exactly an “unwanted child” either. If the sequester happens, it will happen because Republicans want it to happen.
[P]ointing out Republican-caused harms to millions of people — many of them Republicans — does not sway the ultra-right. Why? Democratic pundits say that Republicans want to hurt the president, to show government doesn’t work by making it not work, and to protect “special interests” from higher taxes. All true. But there is an additional and deeper reason. Ultra-conservatives believe that the sequester is moral, that it is the right thing to do.
Progressives tend to believe that democracy is based on citizens caring for their fellow citizens through what the government provides for all citizens — public infrastructure, public safety, public education, public health, publicly-sponsored research, public forms of recreation and culture, publicly-guaranteed safety nets for those who need them, and so on. In short, progressives believe that the private depends on the public, that without those public provisions Americans cannot be free to live reasonable lives and to thrive in private business. They believe that those who make more from public provisions should pay more to maintain them.
Ultra-conservatives don’t believe this. They believe that Democracy gives them the liberty to seek their own self-interests by exercising personal responsibility, without having responsibility for anyone else or anyone else having responsibility for them. They take this as a matter of morality. They see the social responsibility to provide for the common good as an immoral imposition on their liberty.
Their moral sense requires that they do all they can to make the government fail in providing for the common good. Their idea of liberty is maximal personal responsibility, which they see as maximal privatization — and profitization — of all that we do for each other together, jointly as a unified nation.
They also believe that if people are hurt by government failure, it is their own fault for being “on the take” instead of providing for themselves. People who depend on public provisions should suffer. They should have rely on themselves alone — learn personal responsibility, just as Romney said in his 47 percent speech. In the long run, they believe, the country will be better off if everyone has to depend on personal responsibility alone.
Sequestration offers Republicans two potentially irresistible opportunities: the chance to bring President Obama down a peg or two, as well as a shot at implementing spending cuts that the majority of Americans have repeatedly rejected at the polls. The consequences of those spending cuts don’t bother tea party conservatives in the least.
If Sperling doesn't understand that, then he and the White House still have no idea who they're dealing with.
That, by the way, is also a "win" for the other side.