Congressional Republicans and the Sequestration Squeeze

WASHINGTON, DC - FEBRUARY 26:  Senate Minority Leader Mitch McConnell (R-KY) (2nd L) speaks with members of the Republican le
WASHINGTON, DC - FEBRUARY 26: Senate Minority Leader Mitch McConnell (R-KY) (2nd L) speaks with members of the Republican leadership on looming sequestration cuts during a press conference following policy luncheons at the U.S. Capitol February 26, 2013 in Washington, DC. Three days remain before automatic cuts go into effect due to sequestration. (Photo by Win McNamee/Getty Images)

Republicans on Capitol Hill have dug themselves into a deep and narrow chasm whose walls are about to close in. It won't happen overnight, but in a matter of weeks, they may find themselves squeezed mercilessly between their implacable right wing and constituents feeling the pain of sequestration.

Terrified of the Tea Party, Republican legislators dare not advocate closing even the most egregious tax loopholes, such as the "carried interest" dodge or fossil-fuel subsidies. Yet, without such chips on the table, their bargaining power is zero.

Sequestration is compelling the Obama administration to make cuts in federal outlays. This will raise the level of economic pain everywhere, but it could ratchet disproportionately higher in Tea Party land.

2013-03-04-TopTenTeaParty.jpgHere, for example, is one survey's top ten Tea Party states and the gap in billions of dollars between how much each state received in federal expenditures in 2009 minus the federal taxes it sent to Washington that year. As the table makes clear, the redder the state, the deeper its paws in Uncle Sam's pockets.

The Department of Defense has already warned 800,000 civilian employees to expect reductions in their work hours and pay. That's just one piece of a projected $85 billion in cuts. Fewer federal inspectors will slow the flow of meat and produce, leading to higher prices at the supermarket. Fewer Transportation Security Administration agents will lengthen security lines at airports.

The impact of sequestration will not be immediate, but over time, the cumulative reduction in the purchasing power of individuals and businesses will ricochet throughout the economy. Douglas Elmendorf, the director of the Congressional Budget Office, recently testified that sequestration could lead to the loss of 750,000 jobs this year alone.

Higher unemployment, slower or stalled growth, another recession -- the consequences could prove terrible for the nation. An inevitable byproduct: the Republican brand would become even more toxic.

A recent Pew Poll finds a majority of Americans consider the Republican Party "out of touch" and "too extreme." The Quinnipiac Poll reports that Americans disapprove of the performance of Congressional Republicans by a margin of 72 to 19 percent. Among Republicans polled, a majority (51 percent) registered their disapproval compared to 41 percent who approved.
Republicans routinely castigate Democrats as the "tax and spend" party, but according to Forbes Magazine -- hardly a bastion of liberal thought -- Obama has increased federal spending less than any president since Eisenhower.

Moreover, as this chart from Forbes indicates, federal spending tends to rise the most when Republicans occupy the White House.

Over the years, Republican presidents and members of Congress have routinely used the legislative process and appropriations from the U.S. Treasury to reward their corporate supporters. When George W. Bush was president, the government awarded no-bid contracts to Halliburton, Vice President Dick Cheney's erstwhile employer. It also planted a trillion-dollar wet kiss on the pharmaceutical industry with the passage of the Medicare Part D prescription drug benefit.

Part D is one of those so-called entitlements that Republicans now claim are driving the nation to ruin. Yet, under the terms of this GOP-crafted law, Medicare is prohibited from negotiating with pharmaceutical companies to reduce the prescription drug prices it must pay. If Congress were to rescind that prohibition, the federal government, states and Medicare patients would enjoy substantial savings. A recent study by Dean Baker, co-director of the Center for Economic and Policy Research, concludes:

Patients in the United States pay far higher prices for prescription drugs than do people in other wealthy countries. This is true for the Medicare prescription drug program also. If Medicare negotiated drug prices so that beneficiaries paid the same amount as people in other countries, there would be enormous potential savings. For example, if beneficiaries paid the same prices as people in Canada, the federal government would save almost $230 billion over the next decade, along with states saving $31 billion and beneficiaries saving $48 billion. If the program negotiated the same prices as are paid in Denmark, the savings to the federal coffers would be $541 billion. States would save $73 billion and beneficiaries would save $112 billion.

The "pharmaceutical payoff" may be the worst example of corporate welfare dispensed by Congressional Republicans. But there are dozens of other GOP sweetheart provisions that President Obama could put on the table to drive down the federal deficit and, in the process, force hard -- and embarrassing -- choices on Republican legislators. The sequester helps neither party, but the pressure on the GOP is likely to intensify. As the impact of sequestration begins to take its toll on individuals and businesses, the cost of the GOP's giveaways may come into sharper focus. If they do, the squeeze on Republican members of Congress could become much more painful.