What is sequester? It is an order by the president to the treasury secretary to take money already approved and appropriated by congress, separate it from the general funds, lock it up and, prevent the government from spending it, even though congress has already appropriated and approved the expenditures.
How much is being sequestered? In the order signed by President Obama yesterday, 10% of all appropriated discretionary and military spending, across-the-board, has been sequestered.
Why did President Obama sign the sequester order? Because he is required by law to sign it. In August 2011, congress passed the Budget Control Act of 2011 requiring the sequester order to be signed on January 2, 2013, if congress had not passed a bill with individually-named cuts totaling $1.5 trillion dollars by December 31, 2012. In the “fiscal cliff” deal, the deadline was moved to February 28, 2013. Congress failed to pass individually-named cuts by either deadline.
Why was a sequester clause included in the Budget Control Act of 2011 in the first place? Because congressional Republicans were holding a gun to President Obama’s head on the debt ceiling. They were refusing to raise the debt ceiling in 2011 unless the unrelated deficit was reduced by $4 trillion dollars. President Obama pointed to $2.5 trillion in deficit savings which he had already accomplished. He wanted to accomplish the final $1.5 trillion in deficit reduction with a mix of revenue (allowing the Bush tax cuts to expire on the top income brackets and closing tax loopholes which allow the wealthy to pay effective rates far below the stated rates) plus targeted cuts which would keep the full burden of the cuts from falling solely on the elderly, poor and vulnerable. Congress, on the other hand, wanted to accomplish the final $1.5 trillion in deficit reduction solely by cutting social programs, including Social Security benefits, while preserving the reduced tax rates and loopholes for the wealthy.
President Obama was facing the very real possibility that the United States was going to default on its debt obligations for the first time in history because congress was refusing to raise the debt ceiling for the first time in history. So President Obama proposed that congress go ahead and raise the debt ceiling so he could pay the country’s debts and, in exchange, he would to appoint a bipartisan commission which would identify $1.5 trillion in deficit reduction through a mix of revenue and spending cuts.
Republicans gave the idea of appointing a committee a huge collective eye roll.
So to sweeten the pot for the deal (so he could get the debt ceiling raised so the US would not go into default) President Obama proposed that if the bipartisan commission or “super committee” did not come up with $1.5 trillion in a deficit reduction package that would pass both chambers of congress by December 31, 2012, then the 10% across-the-board sequestration would take effect automatically on January 2, 2013.
House Republicans loved the idea. While they had always blocked and obstructed any proposal by President Obama -- just because it was his proposal -- they had found one that they actually loved. Speaker Boehner said afterwards that he got 99% of what he wanted in the August 2011 Budget Control Act.
Having learned from past experience (the ObamaCare cuts to Medicare providers) that even though the proposal was something Republicans loved, they would later turn it into something sinister and blame it on President Obama, Minority Leader Pelosi told Speaker Boehner that Republicans would have to provide the majority of the votes necessary to pass the deal, so they couldn’t turn around later and try to blame in on the Democrats. So Minority Leader Pelosi provided 95 Democrat votes in favor and 95 Democrat votes against, leaving House Republicans to have to provide the overwhelming majority of the votes so they would own the legislation which they so loved. House Republicans voted in favor of the deal by a vote of 174 Republicans in favor of the deal and only 66 Republicans against it.
Why was it so important to show the public that the sequester deal was Republican-owned even though President Obama had proposed it? Because the entire issue of having to reduce the deficit by $1.5 trillion dollars in order to get the debt ceiling raised so the US would not default on its obligations, was an artificial and unnecessary issue, solely created by Republicans. In order to get the debt ceiling raised, President Obama had to throw a bone to the House Republicans which he knew they could not refuse. But if they had not been holding the increase in the debt ceiling hostage to the unrelated issue of deficit reduction, there would have been no need for a deal in the first place.
From 1960 through 2010, the debt ceiling had been raised 78 times, including 17 times for Reagan, 5 times for Clinton, 7 times for Bush II; and, 3 times for President Obama (during the time congress was controlled by Democrats). At no time in history had any congress led by either party refused to routinely raise the debt limit for any president of either party. Not until President Obama was elected. (The Clinto-Newtonian “government shutdown” was over money to fund the operations of the government; it was not over a refusal of congress to raise the debt ceiling.)
Why had congress never before refused to raise the debt limit? In the previous 78 times spread over 50 years, congress had routinely raised the debt ceiling without question because there was universal recognition that raising the debt ceiling has nothing to do with new government spending or budget deficits or funding government operations. Raising the debt ceiling is solely for the president to be able to borrow the money to pay for the items which congress has already approved and already spent. It's exactly like a credit card. Congress votes to put things on the card knowing we don't have the money to pay for them (like two unfunded wars and the unfunded prescription drug plan which was the largest expansion of the Medicare entitlement in modern history), so congress routinely authorizes the president to borrow the money to pay for the things they have charged to the card, when the credit card bill comes due.
And to make matters even worse for President Obama, congress was simultaneously making sure that the amount of income coming into the government -- which the government could use to “pay cash” for regular operations and infrastructure and interest on the credit card and other necessities -- was intentionally kept low (by refusing to let the Bush tax cuts for the wealthy expire and refusing to close tax loopholes used by the wealthy), causing even more things to have to be charged to the credit card.
Even though the Budget Control Act of 2011 which was passed and signed in August 2011 averted a US default by a day or so, the bond rating companies still downgraded the country’s credit rating as a result of us coming so close to default. So there was real damage done to the country by the House Republicans artificially and unnecessarily creating the 2011 budget crisis just to get their way on a totally unrelated issue. And the sequester order signed yesterday is the continuing fallout of congressional Republicans, for the first time in history, refusing to let a president pay the country’s credit card until the president agreed to an unrelated demand.