Republicans’ logic on the sequester

The news on our next of many fiscal crises is that the Republicans in the House do not want to make a deal to stop the sequester. The sequester, you will remember, is the law that cuts about $1 trillion in spending over the next 10 years. It was enacted in 2011 in order to get Republicans to agree not to make the US default during the debt limit crisis. The sequester will deeply and indiscriminately cut both domestic programs and defense spending starting in March. Mostly everyone agrees that these untargeted, indiscriminate cuts are a terrible way to reduce spending and will do great damage to the economy. However, Republicans will let them go through because they are better than any likely alternatives.

The important thing to remember here is the Republican caucus’ fiscal priorities. They go something like this:

  1. Lower taxes on the rich as much as possible
  2. Cut spending (primarily on the poor/young) as much as possible
  3. Protect defense spending
  4. Anything else

Many Republican defense hawks do not like the defense cuts in the sequester. Democrats thought that including these cuts in the sequester would bring Republicans to the table to negotiate a reasonable compromise on the debt. It appears they miscalculated.

Even though the majority of Republicans are uneasy with the military cuts, they are not about to negotiate with Democrats and trade the military cuts for getting rid of tax loopholes. Republicans hate revenues even more than they love defense spending. The money to be gained from closing those tax loopholes is reserved (in Republicans’ minds) for reducing tax rates later on down the line. With all the revenue from cleaning out the tax code, President Marco Rubio will be able to pass huge tax cuts for the rich, wiping out all the tax increases Obama passed in the fiscal cliff deal.

Republicans can’t just cancel out the sequester entirely because that would mean they would have to cancel out the domestic cuts as well, and obviously objective #2 is higher than objective #3.

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