Washington's addiction to manufactured crises is the result of one party's stubborn economic ignorance -- time for the press to call it out.
The sequester is happening, people. At some point today, President Obama will send an order to cut $85 billion in spending in 2013, and then, slowly, those cuts will take place.
The extremely specific reason why the sequester is happening is that it's the law and there is no deal on the table to replace it with another law. The bigger picture is that the sequester is the law because the president made a deal with Republicans to avoid hitting the debt ceiling and defaulting on our debt in 2011. That deal included a guillotine to spending if we didn't cobble together a deficit-reduction plan before 2013. It's 2013. We haven't cobbled together a plan. So here comes the guillotine called Sequester.
There are many things to say about the sequester, but I want to focus on how it's not merely a silly law, but an absurd law that rewards muddled thinking about both our debt and our politics. So here are the three silliest things about this very silly law.
(1) The sequester is a crazy way to cut the this year's deficit.
If you ask 100 budget experts how to cut spending, zero of them will say: "Take a guillotine to each agency, regardless of its resources or purpose." And yet that's exactly what sequester does. In the next few days and weeks, it might have little impact. But over time it will wreak havoc with military contracts and devastate the most important parts of government spending in infrastructure and research.
The sequester wasn't designed to be a good law. It was designed to be such a bad law that Congress would feel compelled to replace it with another one. But that's the second crazy thing about the sequester: It's forcing Congress to take painful action where painful action isn't even needed yet.
(2) We don't need to cut the 2013 deficit, anyway.
Don't think of the debt as a monolithic danger. Think of it as a triptych.
In the first frame, we have this year's deficit, which is the difference between taxes and spending in 2013. If the gap were a couple hundred billion dollars bigger, it would be no problem. In fact, it would create jobs, improve infrastructure, and grow the total economy at an incredible bargain because we can borrow money at historically low rates.
In the second frame, we have the next 10 years of deficits. We don't know what's going to happen over this time (who could have predicted the Great Recession in 2003?) but it would be responsible to raise taxes and let spending fall across defense, mandatory, and discretionary spending, at least as an insurance policy against the odds that our interest rates go up more than we'd like in the next 10 years.
In the third frame, there is the long-term debt, which is the accumulation of all these deficits. The long-term debt crisis is basically a health-care crisis. If health-care costs slow down, we'll be fine, basically. If health-care costs don't slow down, we'll be screwed.