At the end of that month, funding runs out for the federal government’s general operations (via a “continuing resolution” in D.C. speak). And the nation must raise its borrowing authority (aka the “debt limit”) sometime during the summer.
But the first installment, the sequester, is a good example of Washington making lots of noise about rationality while a given fiscal fuse burns.
Congressional Budget Office Director Doug Elmendorf recently testified that those cuts would reduce gross domestic product (GDP) by more than half a percentage point in 2013 and cost some 750,000 jobs. In an economy crawling along at about 2 percent annual growth in GDP and some 150,000 jobs created per month, that’s a big deal.
But just as the newly reelected president was able use the countdown to across-the-board tax increases with the fiscal cliff to extract tax increases from a recalcitrant GOP, Republicans are patiently waiting for Democrats to make their day as spending cuts loom.
“We don’t believe across-the-board spending cuts are a wise way to control spending in this town,” said Rep. Tom Price (R) of Georgia, a leading House conservative, “but if it’s the only way it will happen then that’s the way it will have to happen.”
While Democrats are reportedly constructing a sequester offset of alternative cuts, they will almost certainly include well-worn Democratic hobbyhorses, like ending special tax preferences for hedge fund managers and the oil industry, that are nonstarters for the GOP.