25 October 2012

Obama's Mis-Prediction - Or the Inevitability of Sequestration

Obama casually commented in the last debate that automatic spending cuts and tax hikes won't kick in next year. He thinks that DC will avoid the sequestration. I don't believe him.

Elected officials can't win votes if they propose tax hikes - unless it is for the very rich.

Elected officials can't win votes if they propose spending cuts - unless it is for that elusive line-item labeled "waste and fraud."

So, you can tax the rich and you can cut waste. Anything else is off-limits. But as Clinton reminded us, the mysterious powers of arithmetic extend even to Congress and if you can't cut spending or hike taxes, there is no way to close a trillion dollar deficit gap.

So, what's a politician to do? Let automatic provisions kick in.

Best-case, the sequestration will become the new baseline against which all future cuts and hikes will be measured. It will be adopted as the basis for Republicans claiming that they didn't raise taxes and  Democrats claiming that they didn't cut programs.

I simply don't see politicians leaving their fingerprints on any tax hikes or program cuts in any other way. And there is no other way to begin to close this record gap.

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