President Obama last week lamented the stupidity of the automatic spending cuts contained in the sequester, calling them “dumb, arbitrary.”
The sequester (which imposes cuts in infrastructure, research, and other valuable programs at a time when the job market remains weak) may be dumb. But the sequester is not arbitrary, in the sense of being random or haphazard. Just the opposite. It would be hard to find another recent public policy that is a more precise and logical reflection of American political priorities (and partisan conflicts).
By design, the sequester does not trigger tax increases, and virtually exempts the major entitlement programs—Social Security, Medicare, and Medicaid—from spending cuts. In keeping entitlements and taxes off the table, the sequester bears similarity to the sequester mechanism contained in the Gramm-Rudman-Hollings (GRH) budget law of 1985. Under GRH, the base for sequestration was about 40 percent of federal spending. Programs that could not be touched included Social Security, Medicaid, and food stamps. Payments to doctors under Medicare could be reduced, but no more than 2 percent.
Just as today, the choices about what preexisting policies to target or protect in a sequester were revealing. As Joseph White and Aaron Wildavsky wrote about the GRH sequester in their excellent book, The Deficit and the Public Interest, “GRH calls for quite possibly dumb, from a program perspective, arbitrary, percentage cuts across many programs. But it would be false to conclude, as many have, that the act is mindless in the sense of lacking a strong sense of priorities. Indeed, in its inclusions and exclusions, GRH contains the clearest expression of national priorities of any single act every passed: clearly, what cannot be cut has priority over what can” [emphasis in the original].
In a similar vein, the current sequester expresses the priorities (and conflicts) of the contemporary American polity. The top goal of the GOP is to keep taxes low. The Democratic party’s core commitment is to protect entitlement benefits. The two goals are mutually contradictory from the standpoint of long-term budget policy, but at least for now, they can be reconciled politically.