Carol Shea-Porter is Chicken Little

Carol Shea-Porter My own CongressCritter and perpetual toothache, Carol Shea-Porter (D-NH01), pens an occasional column to the Little People Back Home, i.e. me, and perhaps you. Her latest effort is titled "Stop sequestration, create viable plan" and it appears at her government-provided website.

I think the idea is for New Hampshire's local newspapers to republish these columns as op-eds. I haven't seen any evidence that's happened with this one. Maybe too embarrassing?

Let's look! Carol's (appropriately) on the left with a lovely #EEFFFF background color; my comments are on the right.

This is chapter 12 of "The Sky is Falling," authored by Democrats in the House and Senate who opposed the 2011 Budget Control Act and the threat of the sequester it brought about. They warned that the economy would falter if the sequester came to pass. No, it's not you. Carol's opening doesn't make a lot of sense. The "sky is falling" reference is apparently meant to remind us of the tale of Chicken Little, who became convinced that the sky was falling when an acorn fell on her head.

Chicken Little went on to sow hysterical panic among her avian friends creatures. In some versions, their unreasoning fear leads them to their gory doom.

Did Carol really mean to cast herself and her fellow Democrats in the role of Chicken Little? No, probably not. Still…

The Republicans, who hold the majority in the House, warned that the economy would fall if America did not pass a dramatic austerity program. Their tea party members refused to raise the debt ceiling unless there were what they considered to be appropriate cuts to spending and what Democrats considered to be draconian cuts to spending. As America hung on the verge of default, and the tea party in the Republican Caucus refused to yield, the Democratic majority in the Senate and President Obama agreed to the Budget Control Act. Carol's a Democrat, and it's to be expected that her retelling of history casts Republicans (especially the Tea Party variety) as the uncompromising villainous side. You will not learn from Carol that (a) the sequester gimmick was originally proposed by the Obama Administration; (b) the Democrats were at least equally uncompromising on their desire to raise taxes.
The deal was that there would be a supercommittee that would find the spending cuts, but if they could not compromise, the deep cuts would be spread equally between defense and domestic programs. Everyone just knew, was positive that the unthinkable would never happen, that Republicans would blink on defense and Democrats would blink on drastic cuts to everything else, and that there would be compromise. Carol fudges when she implies that the supercommittee's task was merely to "find the spending cuts". They were also empowered to propose tax hikes. In fact, the Democratic members insisted on them, and the supercommittee foundered on that issue.

As far as "everyone just knew": It's worth pointing out that Keith Hennessey (among other realists) considered the failure of the supercommittee to be a likely outcome back when the Budget Control Act was passed.

But there wasn't, and now the sky might actually fall right on our nation's economic recovery. Carol doubles down on the Chicken Little allusion. She clearly doesn't remember the story very well.
Last quarter is the first time the nation's economy has shrunk in almost 40 months, and the reason is the impending sequester with its deep and irrational cuts that require layoffs, slow downs and freezes. Carol's assertion that upcoming hypothetical "cuts" in Federal spending caused GDP shrinkage in 2012q4 is fantasy. (And, given that she actually wields a considerable amount of power, it's a dangerous fantasy.)

Actually, the 0.1% GDP drop was mainly explainable by a significant decrease in defense spending. Which (in turn) was largely relative to the significant use-or-lose increase in 2012q3 spending.

Government spending on goods and services gets counted automatically into GDP, no matter how foolish or unsustainable it is. The private economy (as Larry Kudlow noted) actually did pretty well in 2012q4.

When you demand that the federal government spend at least 9 percent less across-the-board this year, and you don't even have specific targets, you will have a lot of unintended and unwelcome consequences, ranging from defense to medical research to education to transportation programs, etc. Those politicians who kept insisting that the government does not create jobs now have to watch their friends, family and constituents who work for the government or rely on federal contracts face lay offs, and they will see companies lose business and profits. The consequences of deep cuts are upon us. It would be nice if "deep cuts" were actually happening. But a more realistic description is that the sequester cuts spending from a "baseline" where spending had automatic baked-in increases.

Carol's correct that the sequester is a blunt, dumb tool. There is (however) no evidence that Democrats are willing to cooperate in finding "specific targets" for spending reductions—they keep insisting on sneaking in tax increases to add on to the ones passed merely a few months back. And they have zero proposals for entitlement reform.

Until that changes, a blunt tool is the best one we've got.

The Defense Department has been sounding the alarm more than other departments. Defense Secretary Leon Panetta has been going before Congress - the very ones who created this mess - […] As noted above, the sequester was originally proposed by the the Obama Administration. And it's only been a few months since Obama promised to veto any effort to defray defense cuts.

But you won't hear about that from Carol.

talking about the damage the sequester will do. In a letter to Sen. John McCain, the ranking member of the United States Senate Committee on Armed Services, Panetta wrote, "Such a large cut, applied in this indiscriminate manner, would render most of our ship and construction projects unexecutable - you cannot buy three quarters of a ship or a building - and seriously damage other modernization efforts. We would also be forced to separate many of our civilian personnel involuntarily, and, because the reduction would be imposed so quickly, we would almost certainly have to furlough civilians in order to meet the target." Panetta also says this would "seriously damage readiness." What he is talking about is national security and jobs. Is anyone listening yet? Everyone knows there are savings to be had in the Department of Defense, but we should target those cuts so we do not jeopardize security or jobs. While Panetta is warning the country about our national security, the sequester is threatening other programs and jobs. We need to stop this impending sequestration. As Michael Tanner notes, while (non-war) defense spending is disproportionately affected by the sequester, it is not projected to go below 2007 levels. Raising fears about "national security" is (indeed) a Chicken Little response.
We need to find a compromise that allows us to gradually reduce spending, while we find revenue from closing loopholes, reforming the tax code, […] Carol offers the usual Democratic euphemisms for "tax increases" here. Ignoring that we just had a huge tax increase.
and going after waste, fraud, and inefficiency. A truly empty, worthless proposal. Hey, Carol, guess what? You can go after waste, fraud, and inefficiency any time. In fact: you could have done it before now.
There are other suggestions as well. We could add a public plan to the health insurance exchanges. This stupid idea would, of course, make out-of-control entitlement spending even worse. Obama's effort to make it part of Obamacare failed even when Democrats were in complete control of Congress. This is a fundamentally unserious proposal.
We could require the government to negotiate the price of prescription drugs for Medicare Part D. Another one-time Obama proposal that a Democrat-controlled Congress failed to pass. It's a euphemism for price controls; we can guess how well that would work. Even if it had a chance of passage, which it does not.
We could raise the cap on Social Security. And one more tax increase.
But there is very little action on Capitol Hill to do just that. Even if we wanted to discuss it, we cannot because the House is not in Washington, D.C., very often these days. To put it mildly: lack of discussion is not the problem.
Sequester will hurt our economy in New Hampshire. It will hurt our national economy. It will lead to lay offs, and it will create more misery for the middle class and the poor. Congress has spoken. Now, they need to listen. It is time to stop the sequester and create a viable plan that reduces spending gradually and keeps the economy growing. More scarifying from the self-proclaimed Chicken Little. For detailed counterpoint, see Dan Mitchell at Cato, or Jeff Bergner at the WSJ.

Carol's "solution" is to kick the spending can down the road one more time. Just give us more time to figure out something, she pleads. Vague promises of future spending restraint are "balanced" by her demand for specific tax increases right now.

I'm not buying it. How about you?

Last Modified 2018-02-26 4:08 AM EDT