Hey, politics watchers: Are you ready for another utterly avoidable budget crisis with the potential to arbitrarily wreck the economy? Well, good news! The "sequester"—a trillion dollars in spending cuts that no one actually wants—is barreling towards us, and apparently no one intends to stop it. Matthew Yglesias breaks down what you need to know in a Slate column appropriately headlined, "The Idiocy of Sequestration." The highlights:
- What sequester is: A set of broad, across-the-board spending cuts. While Social Security, Medicaid, and a few select anti-poverty programs are spared, almost everything else is getting a hefty chunk taken out—16.3% for military programs, and 9.2% for discretionary ones.
- Why it's happening: The sequester was an intentionally awful set of cuts designed to force Congress to create an alternative, sensible debt reduction plan. It didn't.
- Why the cuts are dumb: "A time of high unemployment and ultra-low interest rates is a strange time to be cutting spending," Yglesias observes. The cuts also expressly forbid trying to focus the cuts on unimportant or ineffective programs. "Things are just cut willy-nilly."
- What harm they'll do: A lot. One Goldman Sachs analyst predicts a full percentage point hit to GDP, and the Bipartisan Policy Center calculates that they could result in 1 million fewer jobs next year.
- But at least it fixes the deficit, right?: "Not really," Yglesias argues. "The deficit right now isn't a problem." The worry is that an aging population and rising health care costs will eventually be disastrous, and the sequester doesn't touch entitlements.
- Why Congress won't just call it off: Republicans are demanding that defense cuts be replaced with more social cuts. Democrats will only call off the cuts if they get tax increases. Neither platform will fly, at all, with the other party. "Congress tried to bluff itself and now it’s prepared to call its own bluff," Yglesias says.
Click for his full column