If you want to understand the White House’s political dilemmas as sequestration looms, look to Newport News, Va., where the president is going this week to highlight the looming cuts and chew out Republicans. He’ll visit Newport News Shipbuilding, the state's largest industrial employer with more than 21,000 workers. It is the sole builder of U.S. Navy aircraft carriers and one of just two manufacturers of Navy submarines. If you wanted to find something that everyone agrees the federal government does and does well (um, have a Navy), something that’s well-liked (members of the armed services and people who help them), and something with a real, visible economic impact, this is where you would go.
What you wouldn’t do is look at the stock performance of Huntington Ingalls Industries, of which Newport News Shipbuilding is a subsidiary. For all the drama surrounding sequestration, the company’s stock price has been pretty darn steady. If there’s panic in the markets, or the country, it’s not being felt yet.
And this is the issue the White House faces now that the cuts are upon us. How do you push the Republicans to adopt your “balanced” approach of revenue raises and spending cuts to forestall the sequestration cuts? How do you prepare the country for pain without spooking the markets or derailing the recovery?
The White House plan so far is pretty much according to the Fireman First principle, the idea first promulgated by Washington Monthly founder Charles Peters: that a bureaucracy when faced with cuts will tout its most popular program. Hence a mayor faced with a budget shortfall says he’ll have to "cut firemen first" as opposed to "restructure munipcal bond sales first."
Over the weekend, the Obama administration listed cuts by state. Each day a Cabinet officer joins White House press secretary Jay Carney in the press briefing room to outline the woes that are coming. On Monday it was Homeland Security Secretary Janet Napolitano to talk about the impact on border security. She said that delays would be certain at ports, slowing an economy increasingly dependent on just-in-time supply chains as well as border enforcement. Asked if the cuts would make the country more susceptible to acts of terrorism, Napolitano said: “It’s always a threat. We do what we can to minimize the risk, but the sequester makes it awfully, awfully tough.” You might want to adhere to the Fireman First principle but you don’t want to shout fire in a crowded theater.
Right now, the sequestration mess seems to be working in the White House’s favor. The president is popular, and no shortage of Republicans share the White House’s belief that the GOP will get blamed for bad things that happen during the sequestration—even if all parties have their fingerprints on the Budget Control Act that led to the cuts in the first place.
But we don’t really know how much the cuts will affect everyday life. The markets are yawning right now, but will they in a month? Or three months? What happens if there really is faulty meat inspection or a plane crash—things that could have happened even with full funding but which will be easy to blame on sequestration? Who’ll get blamed?
Democrats I spoke with think the Republicans will eventually come around just as they did in January when the Bush tax cuts expired and they signed on to new legislation that raised rates on families earning more than $450,000. Republicans, of course, insist that they’ve already given and that this time, without a cudgel like the expiration of tax cuts the president would not renew, they’re in no mood to cave. Neither side is budging because both sides think they can prevail. As with World War I, when Europe stumbled into war, no one’s really thought through what the world could look like a month from now
What happens, of course, depends on the pain of sequestration. If its bad, the pressure will build on all sides to get a deal. The White House is betting that it will be. Republicans are less sure.
Meanwhile, the White House will continue to wax reasonable. Speaking to the nation’s governors who are gathering in Washington this week, Obama said: "While you are in town, I hope that you speak with your congressional delegation and remind them in no uncertain terms exactly what is at stake and exactly who is at risk."
He took a "Hey-I’m-a-compromiser" tone, saying that Democrats need to "acknowledge that we're gonna have to make modest reforms in Medicare if we want the program there for future generations and if we hope to maintain our ability to invest in critical things like education, research, and infrastructure."
But, he added, "We also need Republicans to adopt the same approach to tax reform that Speaker Boehner championed just two months ago."
In the coming days, look for more of the same approach from the White House publicly while it tries to find some deal behind the scenes to delay the cuts. The latter’s unlikely.
In a way, this is the easy part for the White House. It can paint a picture of what America will be like under sequestration. But in a few weeks, we’ll know if they were right.