Sequester: A Secret Plan

By Dick Morris on February 27, 2013

Published on TheHill.com on February 26, 2013

President Obama’s massive and voluble campaign against the sequester has a deep political motivation that is not apparent on the surface. He is engaging in a battle he knows he’ll lose. Republicans are not going to budge on agreeing to tax hikes to avoid the sequester’s spending cuts, and Democrats won’t opt for entitlement cuts to avoid it, either. So why is he fighting so hard when he has no leverage and battling a measure that will take effect on March 1 if Congress does nothing — something it does rather well?

Here’s the answer: He knows the economy is tanking. He realizes that we are headed for a double-dip recession. He expects unemployment to soar. He understands that his almost $300 billion in tax increases this year will drive us into recession. So he needs an out.

That’s where sequestration fits in: If it goes into effect, he can blame Republican budget cuts for the economic disaster that will probably unfold this year.

It will be the GOP’s fault. All the warnings of the dire impact of these across-the-board budget cuts — including a New York Times article about how states fear the economic impact of sequester — are designed to set up a massive blame game in which he excoriates Republicans for the recession.

Such a stance will, of course, be totally phony. Having raised payroll taxes by $200 billion; income taxes by $65 billion; health insurance premiums by 10-20 percent this year alone; and capital gains taxes by 9 percent; as well as having imposed a home sales tax of 4 percent, a package well north of $300 billion — Obama will blame sequester, amounting to $85 billion, for all the fallout his taxes will cause.

Obama has always survived by using excuses. The recession and unemployment were George W. Bush’s fault. The slow recovery was because of the tsunami in Japan, the collapse of Greece was uncertainty over the debt limit, political gridlock in Washington is Republican threats to shut down the government. His policies are always blameless.

But now his failed policies are really coming up for a pasting. With the economy about to slip into a double-dip recession (we are likely already there) and then fall some more, he needs a super-excuse. It’s hard to say that a spending cut of one-half of 1 percent of gross domestic product will be responsible.

So the big lie bears repeating again and again and again.

First it emerges as a policy statement, then as a warning and prediction, and finally it becomes an explanation and a justification — a poor substitute for a correct policy in the first place.

Obama realizes he is running out of time and excuses. Now into his second term, a falloff in the economy is less likely to be blamed on Bush and more likely to kindle discontent with Obama’s policies. In bad economic times, we tend to blame the president, not his predecessor.

Obama is looking to the Hoover/Roosevelt model in which the continuing high unemployment rate in Franklin Delano Roosevelt’s first term was universally — and correctly — ascribed to Herbert Hoover’s impact on the economy. But throughout FDR’s first term, unemployment dropped from a high of 26 percent in 1933 down to 13 percent in 1936.

FDR faced his own double dip when the economy crashed in 1937 and joblessness rose back up above 20 percent. The causes were the imposition of the Social Security tax — no benefits were paid out until 1940 — and the Wagner Act, which gave unions new power and radically increased wages. FDR couldn’t blame Hoover anymore. So he blamed the “economic royalists.” He said “the economic royalists hate me and I welcome their hatred.”

So Obama is copying the FDR playbook to avoid being identified with the second dip.

It didn’t work for FDR. He suffered huge losses in Congress in 1938 and only won again in 1940 because of the looming threat of war.

Obama’s blame game won’t work either. Voters will pay him back for his economic stewardship in 2014. Big time.

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