Theres been a good deal of chatter to the effect that Republicans still retain leverage in the sequester fight, because some of them are willing to let the sequester happen. But Politico reports that GOP resolve is cracking, with GOPers privately conceding that theyd prefer to reach a deal, because the politics of allowing deep spending cuts, a gutting of defense, and a major hit to the economy are too dangerous.
Of course, GOP aides continue to say they want a deal, but only on their terms which is to say, theyll only accept a deal that averts the sequester through spending cuts alone, with no new revenues.
Herein lies the fundamental weakness of the GOP position. The problem is that Republicans who care about defense are now on record claiming the sequester will threaten our national security. As Lindsey Graham put it yesterday: Im sure Iran is very supportive of sequestration.
Which raises a question: If the sequester will help our enemies, and put the country at risk, shouldnt Republicans be willing to discuss closing tax loopholes that benefit the rich and corporations the same loopholes they were previously willing to entertain closing to avoid it?
Senate Democrats are drawing up a plan to avert the sequester by limiting tax breaks for oil and gas exploration, nixing tax breaks for private equity employees who pay a lower capital gains tax, and other measures. The idea is to put pressure on Republicans to choose between protecting tax breaks for special interests on one side, and gutting defense and tanking the economy on the other.
This is a tough position to be in, as Politico reports, but its made worse by an inconvenient fact: If Republicans were to agree to closing loopholes, they would also get some of the spending cuts they want. In other words, the choice isnt: Either give Dems what they want while getting nothing in return or let the sequester destroy the economy. Rather, the choice is: Reach a compromise that gives both sides some of what they want or let the sequester destroy the economy.
Republicans have dealt with this problem by pretending that Dems arent actually willing to cut spending. As John Boehner put it yesterday: At some point, Washington has to deal with its spending problem. But of course, Dems have not only agreed to cut spending; they have already accepted a good deal more in spending cuts than Republicans have agreed to in new revenues. And the plain fact is that Obama has reiterated that the same spending and entitlement cuts he offered in 2011 are still on the table, even irking his own base in the process.
Ultimately, what this comes down to is that the public is less likely to see Republicans as the party thats acting in good faith here. Since Republicans are on record claiming the sequester will help the enemy and even admitting it will tank the recovery, are they really going to protect loopholes and deductions enjoyed by the rich and corporations again, as part of a compromise that gives them some of what they want, too rather than avoid such an outcome?