Bob Woodward Rewrites the History of the Sequester
No account of how the United States ended up at the brink of the $1.2 trillion, ten-year budget sequester is complete without these two phrases: "debt ceiling hostage-taking" and "Super Committee." Nevertheless, in his grandstanding campaign to lay blame for the automatic spending cuts at President Obama's feet, Watergate journalist turned deficit hawk Bob Woodward conveniently ignores them both. And a quick glance back reveals, it was the Republicans' unprecedented threat to trigger a first-ever U.S. default--and with it, a global economic cataclysm--that was the real "deal-changer."
In his Washington Post screed ("Obama's sequester deal-changer"), Woodward rejects Obama's claims past and present that the sequester "is something Congress proposed." Looking at the negotiations in the final days before Congress passed and Obama signed what became the Budget Control Act of 2011 (BCA), Woodward argues that "when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts":
My extensive reporting for my book "The Price of Politics" shows that the automatic spending cuts were initiated by the White House and were the brainchild of Lew and White House congressional relations chief Rob Nabors -- probably the foremost experts on budget issues in the senior ranks of the federal government.
Obama personally approved of the plan for Lew and Nabors to propose the sequester to Senate Majority Leader Harry Reid (D-Nev.). They did so at 2:30 p.m. July 27, 2011, according to interviews with two senior White House aides who were directly involved.
But history didn't start on July 27, 2011. In the months leading up to the August 2011 deal, Republicans threatened--and had the votes-- to block an increase in the U.S. debt ceiling, a hitherto unheard of and unimaginable act of economic self-destruction. And in the months after the BCA was inked, GOP members of the so-called debt "Super Committee" torpedoed any sequester alternative that included new tax revenue. Without the GOP debt limit extortion Senate Minority Leader Mitch McConnell boasted was "a hostage that's worth ransoming," there is no sequester.
Of course, you'd never know that reading Woodward's fractured fairy tale. The only hints come by way of Woodward's pro forma "both sides do it" declaration ("The Republicans are by no means blameless and have had their own episodes of denial and bald-faced message management") and a revealing but unexplained quote from Jack Lew's testimony before the Senate Finance Committee on February 13th. Senator Richard Burr (R-NC) asked Lew, "Woodward credits you with originating the plan for sequestration. Was he right or wrong?"
"It's a little more complicated than that," Lew responded, "and even in his account, it was a little more complicated than that. We were in a negotiation where the failure would have meant the default of the government of the United States." [Emphasis mine.]
Americans didn't need to take Lew's word for it. From the moment they assumed the House majority in 2011 Republicans leaders admitted as much. The United States has never defaulted on its obligations and had never put its full faith and credit in jeopardy (especially by choice). Nevertheless, GOP leaders promised to do just that unless their demands for draconian spending cuts were met. While Paul Ryan warned "You can't not raise the debt ceiling," the new Speaker John Boehner agreed such a failure would produce "a financial disaster, not only for our country but for the worldwide economy." In January 2011, South Carolina Senator Lindsey Graham nevertheless promised his party would do the unprecedented--and previously unthinkable:
"Let me tell you what's involved if we don't lift the debt ceiling: financial collapse and calamity throughout the world. That's not lost upon me. But we've done this 93 times. And if we keep doing the same old thing, then that is insanity to the nth degree."
Key to understanding the current fiscal brinksmanship in Washington is the Republican pretense that history began on January 20, 2009. As the new GOP House Majority's default threat escalated in the spring and summer of 2011, Texas Rep. Jeb Hensarling claimed that for Republicans raising the debt ceiling is "contrary to our DNA," Majority Leader Cantor pleaded for understanding:
"I don't think the White House understands is how difficult it is for fiscal conservatives to say they're going to vote for a debt ceiling increase."
That, of course, is complete nonsense. The debt ceiling was routinely raised 40 times since 1980, including 17 times under Ronald Reagan (who tripled the national debt) and another seven under President George W. Bush (who nearly doubled it again). As it turns out, the current GOP leadership team including Eric Cantor voted a combined 19 times to bump the debt limit $4 trillion during Bush's tenure. (That vote tally included a "clean" debt ceiling increase in 2004, backed by 98 current House Republicans and 31 sitting GOP Senators.)
Of course, they had to. After all, the two unfunded wars in Afghanistan and Iraq, the budget-busting Bush tax cuts of 2001 and 2003 (the first war-time tax cut in modern U.S. history) and the Medicare prescription drug program drained the U.S. Treasury and doubled the national debt by 2009. As the Center on Budget and Policy Priorities concluded two years ago, the Bush tax cuts accounted for half of the deficits during his tenure, and if made fully permanent, over the next decade would have cost the U.S. Treasury more than Iraq, Afghanistan, the recession, TARP and the stimulus--combined. And Mitch McConnell, John Boehner and Eric Cantor voted for all of it.
When President Obama paid their ransom in the form of the August 2011 Budget Control Act overwhelming supported by Congressional Republicans, the GOP brass was thrilled with their successful extortion. Speaker Boehner, who has acknowledged that debt limit will have to be raised repeatedly in the years to come, declared "I got 98 percent of what I wanted. I'm pretty happy." For his part, Senate Minority Leader Mitch McConnell gloated over the BCA and pledged the GOP would be back again and again to take the U.S. economy hostage. As he explained on August 2, 2011:
"I think some of our members may have thought the default issue was a hostage you might take a chance at shooting," he said. "Most of us didn't think that. What we did learn is this -- it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done."
McConnell, the Washington Post revealed, "said he could imagine doing this again." And as he explained to CNBC's Larry Kudlow, McConnell's future hostage-taking isn't a threat, but a promise:
"What we have done, Larry, also is set a new template. In the future, any president, this one or another one, when they request us to raise the debt ceiling, it will not be clean anymore. This is just the first step. This, we anticipate, will take us into 2013. Whoever the new president is, is probably going to be asking us to raise the debt ceiling again. Then we will go through the process again and see what we can continue to achieve in connection with these debt ceiling requests of presidents to get our financial house in order."
But if history didn't begin on the afternoon of July 27, 2011, it didn't end with the signing of the BCA days later, either. And while you'd never know it reading Woodward's story, the Budget Control Act also established a bipartisan Congressional debt "Super Committee" tasked with negotiating an alternative path to the $1.2 trillion in automatic spending reductions mandated by the sequester. But the Super Committee, stacked as it was with Republican supply-siders insisting that "tax cuts pay for themselves," failed when GOP members refused to countenance even a penny in tax hikes. Instead, they claimed they could magically produce new revenue by cutting taxes. Republicans offered $300 billion in new revenue, which they claimed would result from making the Bush tax cuts permanent, further cutting the top rate to 28 percent and then closing some loopholes and deductions. As an astonish Steve Benen remarked about headlines touting a major GOP concession:
Think about it: as part of a debt-reduction deal, Republicans want to increase tax revenue by less than $300 billion and cut tax revenue by roughly $4 trillion.
As Washington Post colleagues Paul Kane and Rosalind S. Helderman further explained, "The two sides are in deep dispute because Republicans want to count these increased receipts based on the expectation of surging economic growth -- a standard that neutral budget observers have declined to use in the past."
It's no wonder the Super Committee failed so miserably. And by now, it should be no mystery where ultimate paternity for thesequester resides. Again, the history is clear: no GOP threat of a default, no sequester.
Two years ago, former Bush Treasury Paul O'Neill had a term to describe the Republicans' never-before-seen brinksmanship:
"The people who are threatening not to pass the debt ceiling are our version of al Qaeda terrorists. Really. They're really putting our whole society at risk by threatening to round up 50 percent of the members of the Congress, who are loony, who would put our credit at risk."
But according to Bob Woodward, it's all Obama's fault.