The sequester: Will it trigger a recession?

In a logical, “more Spock-like world,” said Glenn Thrush in Politico.com, the news that the economy shrank in the final quarter of 2012 would prove to Republicans that America can’t afford the looming, automatic spending cuts known as the “sequester.” The fourth-quarter contraction of 0.1 percent was almost entirely caused by a plunge in government spending—particularly a 22 percent cut by the Defense Department—and offers a chilling preview of what we can expect if the sequester cuts $1.2 trillion from the federal budget starting March 1. Those severe cuts, congressional analysts say, would cost our still-struggling economy 1.4 million public- and private-sector jobs, said The New York Times in an editorial. That would be nuts. The sequester was designed to be so unpalatable that it would force Democrats and Republicans to work out terms of a sane long-term budget. But having lost the fiscal-cliff and debt-ceiling showdowns to President Obama, Republicans are now saying the sequester is preferable to no cuts at all. “In other words, bring on the unemployment.”

Please, Republicans, “don’t back off,” said Larry Kudlow in RealClearPolitics.com. The economy overall may have shrunk slightly at year’s end, but the private sector grew a “very respectable” 3.4 percent in 2012. If the sequester goes ahead, the reduced size of government will “let the private sector breathe,” leading to accelerated growth and a return to true prosperity. Allowing the sequester may be “an idea whose time has finally come,” said John Sununu in The Boston Globe. The president needs to learn that “you can’t tax your way out of a spending crisis,” and the sequester’s cuts really aren’t that awful—7.3 percent for the Pentagon, and 5.1 percent for domestic programs. “Companies make cuts of that size every year just to stay competitive.” It’s high time federal agencies learned how to downsize.

If the sequester kicks in, Democrats will have themselves to blame, said Edward Luce in the Financial Times. They’ve so adamantly resisted any cuts to Social Security, Medicare, and social programs that long-term deficit reduction is impossible. Even the various proposed alternatives to the sequester—a round of more “targeted” cuts, or Obama’s proposal for closing tax loopholes—are going to suck $1.2 trillion out of the economy almost immediately. “There is nothing about the anemic U.S. recovery that merits austerity at this point,” yet Washington in its dysfunction seems determined to inflict it.

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