Big Spending Cuts: Whose Idea Was It?

...idea for sequester originated in White House

...the axe drops March 1st
By
Paul Brandus (Feb. 5, 2013)
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Democrats say one thing, Republicans another. This latest issue that they blame each other for is what's known as (inside-the-Beltway term to follow) the "sequester." The sequester is automatic, and severe, spending cuts that are due to begin on March 1st, unless Congress and the White House can figure out a way to avoid them. The cuts - $1.2 trillion, with half from defense and half from other non-discretionary programs - would be spread over a decade. Many economists fear such deep cuts in spending would push the nation back into recession. Remember: the economy actually shrank 0.1% in the last three months of 2012, because of a big drop in defense sending. 

So whose idea was it? 

During the presidential campaign, Mitt Romney tried to pin it on President Obama. But Obama, in a debate, said it's Congress’s fault.

The true answer, it seems, can be found in Bob Woodward’s latest book, "The Price of Politics,”  which, as The Washington Post (Woodward's home for four decades) notes "had the full cooperation of top White House and congressional officials. Here are the facts, as compiled by the Post, based on Woodward's reporting: 

Page 215 (July 12, 2011):

"They turned to [White House national economic council director Gene] Sperling for details about a compulsory trigger if they didn’t cut spending or raise taxes in an amount at least equivalent to the debt ceiling increase.

“A trigger would lock in our commitment,” Sperling explained. “Even though we disagree on the composition of how to get to the cuts, it would lock us in. The form of the automatic sequester would punish both sides. We’d have to September to avert any sequester” — a legal obligation to make spending cuts.
“Then we could use a medium or big deal to force tax reform,” Obama said optimistically.

“If this is a trigger for tax reform,” [House speaker John] Boehner said, “this could be worth discussing. But as a budget tool, it’s too complicated. I’m very nervous about this.”

“This would be an enforcement mechanism,” Obama said.

Translation: The White House proposed the idea of a compulsory trigger, with Sperling calling it an “automatic sequester,” though initially it was to include tax revenue, not just spending cuts. Boehner was “nervous” about using it as a budget tool.

Page 326 (July 26):

At 2:30 p.m., [then White House Budget director and now nominee for Treasury Secretary Jack] Lew and [White House legislative affairs director Rob] Nabors went to the Senate to meet with [Senator Majority Leader Harry] Reid and his chief of staff, David Krone.

“We have an idea for a trigger,” Lew said.

“What’s the idea,” Reid asked skeptically.

“Sequestration.”

Reid bent down and put his head between his knees, almost as if he was going to throw up or was having a heart attack. He sat back up and looked at the ceiling. “A couple of weeks ago,” he said, “my staff said to me that there is one more possible” enforcement mechanism: sequestration. He said he told them,

“Get the hell out of here. That’s insane. The White House surely will come up with a plan that will save the day. And you come to me with sequestration?”

Well, it could work, Lew and Nabors explained.

What would the impact be?

They would design it so that half the threatened cuts would be from the Defense Department….The idea was to make all of the threatened cuts so unthinkable and onerous that the supercommittee [tasked with making additional cuts] would do its work and come up with its own deficit reduction plan.

Lew and Nabors went through a laundry list of programs that would face cuts.

“This is ridiculous,” Reid said.

That’s the beauty of a sequester, they said, it’s so ridiculous that no one ever wants it to happen. It was the bomb that no one wanted to drop. It actually would be an action-forcing event.

“I get it,” Reid said finally.

Translation: Once tax increases were off the table, the White House staff came up with a sequestration plan that only had spending cuts and sold Harry Reid on the idea.

-Paul Brandus

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