The U.S. economy shrank in the final three months of 2012, and we know exactly why: government spending cuts took capital out of the system and caused a slight contraction. Similarly, the non-partisan Congressional Budget Office reported yesterday that economic growth will be weaker than it should be in 2013 because of "fiscal tightening," including "scheduled automatic reductions in federal spending."
The conversation on Capitol Hill is so ridiculous, it no longer resembles reality in any meaningful way. Congressional Republicans insist they want to improve the strength of the recovery. How? By cutting spending that undermines the strength of the recovery.
In related news, Republicans also believe no exercise and excessive eating is an effective weight-loss method.
The dirty little secret is that the fiscal status quo is working quite well, at least insofar as it's achieving its intended goals -- policymakers have cut spending and raised revenue, which is supposed to reduce the deficit, and which is reducing the deficit. Indeed, the fiscal difficulties Republicans created during the Bush/Cheney era have been largely resolved, with deficits that are projected to keep shrinking and debt levels that are stabilizing.
The problem, of course, is that there are two competing issues that are incompatible -- policymakers can focus on improving the nation's finances or strengthening the recovery. Emphasizing one is detrimental to the other. If the nation wants faster growth and lower unemployment, policymakers are going to have to stop taking money out of the economy.
It's a concept Republicans just can't wrap their heads around.
The likelihood that they would have to compromise with Democrats to replace the sequester has led to a growing inclination among Republicans to simply pocket the savings and move on to other battles.House Budget Committee Chairman Paul Ryan (R-Wis.) has predicted that the sequester will hit on schedule, making it easier for conservatives to approve a plan later in March to prevent a government shutdown. Tuesday, a parade of conservative lawmakers took to the House floor to argue for that outcome.
They know this will hurt the economy -- the CBO just explained it to them -- but they don't care.
Incidentally, President Obama wants a delay that would prevent the policy that would undermine the recovery, and in an interesting twist, a couple of congressional Republicans -- neither of whom is especially moderate -- endorsed the White House's idea yesterday.
Since intra-party GOP divisions are often a sign of future progress, this is an angle worth watching.
One more thing to keep an eye on. When pressed, House Speaker John Boehner (R-Ohio) will say his caucus has already replaced the automatic sequestration cuts with a credible alternative, so this isn't his problem anymore. He's wrong -- not only were the replacement cuts ridiculous, they were also from the last Congress, which means they're no longer applicable.
Maybe the House could try passing the same sequester replacement again? Actually, no.
House Republicans have no plans to vote again this month on their bill to replace automatic spending cuts scheduled to be implemented in just over three weeks.The House-passed sequester replacement measure expired with the start of the new Congress, and GOP leaders would appear to face a tougher lift in passing the measure this time around.The House barely passed the bill -- 215 to 209 -- in December, with 21 Republicans opposing the measure and no Democrats supporting it.Five of the Republicans who voted "no" are no longer in Congress, but the GOP also has a smaller majority after losing a net of eight seats to Democrats in November's election.As a result, if Democrats rally against the bill, there's a chance Republicans would not be able to muster the 217 votes needed to secure passage. Such an outcome would be embarrassing after Republican leaders were forced to pull a tax bill from the floor in December because of a lack of support.
Boehner boasted yesterday, "Republicans have twice voted to replace these arbitrary cuts with common-sense cuts and reforms that protect our national defense." But since bills from the last Congress are no longer viable in the new Congress, the Speaker's claim is nonsensical.
If the current crop of House Republicans want to replace arbitrary cuts with common-sense cuts and reforms that protect our national defense, they'll have to bring a bill to the floor and vote on it. What do you say, Mr. Speaker? Ready to put your bill where your mouth is?