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Can we live with the budget 'sequester'? Yes, but it’s better if we don’t.

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"These cuts would leave the U.S. with its smallest Army since World War II, its smallest Navy since World War I, and its smallest Air Force ever – and this at a time when the world is not growing safer but more dangerous every day," policy analysts Emily Goff and Steven Bucci wrote this month in a Heritage Foundation report.

A more nuanced reality

Yes, the threatened cuts are serious, but the reality may be more nuanced than the partisan sound bites suggest.

Before diving into details, it's important to keep some context in mind.

The potential spending cuts are important for two reasons. The first is simple pragmatism: Decision time is coming quickly, and this is an issue that could affect everything from stock market prices to whether government contractors eliminate thousands of jobs.

The second has to do with politics: The debate over the automatic cuts parallels the presidential election duel over fiscal visions between President Obama and Mitt Romney.

Mr. Romney isn't stumping for the sequester, but his approach to federal spending has important parallels to it. Mr. Obama's approach does not.

Romney calls for an immediate 5 percent cut in discretionary nondefense spending – a budget move that could be called sequester lite. And within four years, he wants to bring federal spending down to 20 percent of the nation's gross domestic product – and then to keep it capped at that level.

Obama, by contrast, would leave federal spending above 22 percent of GDP, and doesn't call for any cap.

With the Senate likely to remain a battleground that is firmly in the control of neither party, the presidential election appears unlikely to give either party a firm mandate on fiscal policy. But the election could serve as a referendum about which candidate's vision voters prefer to give greater influence to, when the bargaining gets going in earnest.

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