Policy: Economy

White House blames Republicans for economic downturn, hits GOP for accepting cuts Obama signed into law

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Politics,Beltway Confidential,White House,Byron York,Economy

When the White House was asked about the economic contraction that took place in the last quarter of 2012 — growth was -0.1 percent, the first in negative territory since 2009 — spokesman Jay Carney was quick to point fingers.  “Our economy is facing a major headwind,” Carney said Wednesday, “and that is Republicans in Congress.”

Carney, whose boss, the president, has been in office four years, claimed that Republican “brinksmanship” has driven the economy into the ground.  Perhaps the biggest problem, Carney said, is that GOP leaders are now discussing allowing so-called sequestration cuts go into effect as scheduled at the beginning of March.  “Talk about letting the sequester kick in as though that were an acceptable thing belies where Republicans were on this issue not that long ago,” Carney said, “and it makes clear again that this is sort of political brinksmanship of the kind that results in one primary victim, and that’s American taxpayers, the American middle class.”

The sequester — about $1.2 trillion in across-the-board cuts agreed to during the debt-ceiling negotiations in 2011 and signed into law by President Obama — were designed to be so unacceptable to both parties that leaders would intervene with more rationally-designed cuts before the sequester ever went into effect.  Since Democrats designed the reductions to have a disproportionate impact on defense — in line for about $500 billion in cuts — some Democrats believed Republicans would never allow sequestration to go into effect.  At that point, all the cuts, including hundreds of billions in discretionary spending favored by Democrats, would go out the window.

But now many Republicans are making their peace with the sequester.  “There is a pretty broadly-held view that these cuts were agreed to, and now they should go through,” says a Senate Republican aide.  “The idea is that this is the only way cuts are going to happen, and Republicans will take it.”

So now it is the White House and Democrats who are complaining.  Previewing what will likely become a frequently-repeated Democratic talking point, Carney argued that it would be outrageous to allow the Obama-signed sequester law go into effect when wealthy taxpayers and corporations still receive tax breaks.  “It can’t be we’ll let sequester kick in because we insist that tax loopholes remain where they are for corporate jet owners, or subsidies provided to the oil and gas companies that have done so exceedingly well in recent years have to remain in place,” Carney said.  “That’s just — that’s not I think a position that will earn a lot of support with the American people.”

The bottom line, though, is that, like the January 1 tax increases, the sequestration cuts are already scheduled to take effect.  In the case of taxes, Republicans felt a huge pressure to act before big increases hit everyone.  Now, Republicans might decide the best thing to do is nothing — and let the cuts, agreed to by Republican and Democratic lawmakers and Obama himself — go into effect.

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