Cancelling Sequester May/Should Be The Only Acceptable Option
Anyone involved in, observing or analyzing the federal budget knows by now that the sequester -- the across-the-board spending cuts that were triggered when the anything-but-super committee failed to agree on a deficit reduction plan -- was supposed to be so bad that Democrats and Republicans alike would do everything possible to avoid it. That was the theory, anyway.
The problem is that it hasn't worked out as expected. Rather than be the worst-possible alternative, it turns out that the sequester is actually the best for most representatives and senators compared to the tax increases and Medicare and Medicaid reductions that one side or the other (but not both) are saying they prefer.
That's not to say that the sequester is anyone's first choice because it clearly isn't. But it's just as clearly become everyone's second choice compared to every other alternative way to reducing the deficit.
But what if the question were different? What if instead of the sequester vs a tax increase or entitlement reduction, the choice was between a sequester and no sequester?
That's the as-yet largely unspoken option: Instead of the $85 billion in across-the- board spending reductions, vs everything else, what if it was the sequester vs no sequester? The deficit will be $85 billion higher than it otherwise would be, but no one's taxes will be raised, military and domestic spending won't be cut and Medicare and Medicaid won't be touched.
Not only would this be politically feasible, it also would be the right fiscal policy at this moment. With businesses and consumers not spending, trade not helping and state and local governments still cutting back, it makes no economic sense right now for the federal government to be reducing its contribution to GDP by cutting spending.
The good news is that Republicans and Democrats will be able to blame the other for the higher deficit. They'll do that laughing all the way to the polls while Wall Street, the military contractor community and macro economists everywhere erupt in cheers.