POLITICS

The Republican sequester position explained

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Politics,Beltway Confidential,Conn Carroll

Ezra Klein says he doesn’t understand the Republican position on the sequester, but he actually understands a lot more than he lets on. Ezra writes:

As I understand it, the GOP has five basic goals in the budget talks:

1) Cut the deficit.
2) Cut entitlement spending.
3) Protect defense spending, and possibly even increase it.
4) Simplify the tax code by cleaning out deductions and loopholes.
5) Lower tax rates.

The White House is willing to cut a deal with Republicans that will accomplish 1, 2, 3 and 4. But Republicans don’t want that deal. They’d prefer the sequester to that deal. That means they will get less on 1, basically nothing 2, 4, and 5, and they will actively hurt themselves on 3. So, rather than accomplishing four of their five goals, they’re accomplishing part of one. Some trade.

I’ve asked some Republicans sources to explain their thinking to me. But none of the answers quite seems to add up.

One answer is that they’re hoping the sequester gives them so much leverage that the Democrats fold and accept an equivalent or larger package of spending cuts that Republicans prefer. But I can’t find any Republicans who actually believe that will happen.

Another explanation is that Republicans don’t want to cut tax deductions now — which is the key to any deal with the Democrats — because they want to use those deductions to pay for rate-lowering tax reform. But if they’re not open to new revenues, they’re not getting rate-lowering tax reform while President Obama remains in office. And if they take power after Obama leaves office, they can just lower tax rates without paying for it, as they’ve done many times before.

Republicans do want 1, 2, 3, 4, and 5 but Obama is not offering anything that accomplishes items 2 through 4.

For starters, on taxes, the current Democratic ask on the sequester is the Buffet Rule which only complicates the tax code and does nothing to simplify it. The White House has even admitted the Buffett Rule is about fairness not deficit reduction.

On spending, Obama has offered some very minor entitlement spending cuts in the form of Chained CPI and an increase in the Medicare eligibility age. But neither of these reforms would save much money or change the underlying incentives that drive increased spending. At best they amount to rearranging the deck chairs on the Titanic, and at worst they would make later reform of the programs more difficult.

The bottom line is that Republicans simply do not believe anything worthwhile can be accomplished on entitlement or tax reform while Obama is in office. So instead of wasting time on big ticket reforms that will never happen, Republicans are fighting to protect what little deficit reduction they’ve already accomplished through the sequester.

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