As anyone who has willed himself to pay attention to the latest budget crisis probably knows, the purpose of the “sequestration” — the $1.2 trillion in automatic spending cuts that kicked in on March 1 — was to pose a threat so dire that Congress would be certain to replace it with something better. Sequestration came into being in 2011, as a way to avoid the catastrophic debt default that Republicans were threatening if President Obama did not agree to deep cuts. It rested upon a political logic that seemed to make sense. Because the cuts were evenly divided between Democratic priorities (domestic spending) and Republican ones (military spending), leaders in both parties believed that they would find a better way to lock in the deficit reduction that the GOP was demanding.
Even so, most insiders privately assumed that if the two sides failed to come up with a replacement package, Republicans would probably cave first. That’s because sequestration doesn’t touch entitlement benefits from Medicare and Social Security that Democrats care about most, but it does hit the military especially hard, a concession Republicans had to make in lieu of agreeing to automatic tax increases. The fact that the Defense Department budget was already scheduled to shrink by $500 billion over the next decade made the additional $500 billion in sequestration cuts seem all the more unthinkable.
Indeed, House Speaker John Boehner made precisely this argument to his caucus members to get them to go along. “Guys, this would be devastating to Defense,” Boehner told fellow Republicans, according to Bob Woodward’s book “The Price of Politics.” “This is never going to happen.”
But now it has happened. And there’s no sign of the cuts being lifted anytime soon. Many people regard sequestration as an index of Washington’s failure: Congress can’t even succeed in designing a lousy plan! But while it’s true that the plan was flawed, its failure has revealed an important shift within the Republican Party.
One reason that so many people assumed sequestration would work is that it ensured a showdown between two important factions of the party: the anti-tax crowd and the pro-defense crowd. Until now, these groups had easily coexisted, despite the inherent contradiction in their objectives (cutting taxes shrinks the government, while spending more on the military expands it). GOP leaders were always willing to accommodate both, deficits be damned.
In the past, the cuts forced by small-government conservatives have fallen mainly on what’s known as the “non-defense discretionary budget” — mostly social programs to help the poor and middle class.
Military spending wasn’t threatened, and, in fact, doubled in the decade after the attacks on 9/11. Partly, this owed to the strength of the GOP’s defense caucus and partly to Democrats’ unwillingness to challenge that caucus for fear of seeming weak or unpatriotic (when President Obama proposed a budget freeze three years ago, he exempted the armed services).
The presumed strength of the defense caucus, combined with the fact that non-defense spending can’t be reduced much further, implied that tax increases would constitute a significant portion of a plan to replace sequestration. Certainly, the White House thought so: It’s why it didn’t demand more revenue in the fiscal cliff deal.
In hindsight, everybody was wrong. Anti-tax activists steamrolled the defense crowd. Why? The answer probably lies in the composition of the Republican caucus, especially in the House: nearly half its members — 48 percent — were elected in 2010 or after. These Republicans are genetically different from those who held power in the 1980s and ’90s.
They came of age during a period of two failed wars in the Middle East and exploding budget deficits. “This is a group that got elected to rein in spending, not to protect Cold War-era defense,” says David Wasserman, House editor for the nonpartisan Cook Political Report.
The unexpected power of this group has a number of important implications: The military may no longer be sacrosanct; Democrats may wind up with much less tax revenue than they were counting on; Republicans may finally be getting serious about actually cutting the national debt, rather than talking about it. But at least for now, these changes will be imposed in the worst way possible, because a measure never meant to take effect looks likely to remain the law of the land.
Joshua Green is national correspondent at Bloomberg Businessweek. Follow him on Twitter @JoshuaGreen.