Skip to: Content
Skip to: Site Navigation
Skip to: Search


How to avoid the sequester and give both parties what they want

To move beyond the sequester, Republicans and Democrats must figure out what they can give up to get what they really want, Steuerle writes. 

By Gene SteuerleGuest blogger / February 28, 2013

The US Capitol Building is pictured in Washington. Each party is fiercely fighting to compel the other to ask the middle class for the inevitable — to give up something to restore balance to the budget, Steuerle writes.

Jason Reed/Reuters


I would like to propose a simple plan that would let Republicans and Democrats avoid a blunt, across-the-board sequester that fails to set priorities. It would give both parties something they want without abandoning their core principles. And it would strengthen the party making the proposal by putting the other on the spot if it fails to move toward a moderate compromise.

Skip to next paragraph

The Tax Policy Center is a joint venture of the Urban Institute and Brookings Institution. The Center is made up of nationally recognized experts in tax, budget, and social policy who have served at the highest levels of government. TaxVox is the Tax Policy Center's tax and budget policy blog.

Recent posts

Republicans should offer to let the president meet the sequester’s deficit targets through his choice of spending cuts, including from entitlements. Yes, they would cede some power over a moderate share of total spending, but they would retain their primary goal: forcing Democrats to tackle the spending side of the budget.

Democrats should replace their demand that the sequester include tax increases with a simpler requirement that the rich shoulder their fair share of any spending reductions. Yes, Democrats would give up their goal of balancing spending cuts with tax increases, but they would retain their more basic aim: progressivity.

To understand why these strategies would work, we have to go back to the root causes of the impasse. Each party is fiercely fighting to compel the other to ask the middle class for the inevitable—to give up something to restore balance to the budget. But each considers it political suicide to take the lead. Just think back to the presidential campaign, when Barack Obama and Mitt Romney indicated support for Medicare cuts, only to be viciously attacked by the other. 

Republicans want all deficit reduction to come from direct spending but recognize that most of those outlays are in so-called mandatory or entitlement spending, which occurs automatically with no new vote required by Congress.

Democrats believe the rich have made out quite well in recent decades and should bear a significant portion of any deficit reduction. They feel it is unfair and unbalanced to exclude tax subsidies, which tend to favor high-income households, from any deficit reduction plan.

To an economist of any stripe, deciding which programs to fix according to the labels we place on them—direct spending or tax subsidy—is silly. In truth, Republicans should be as willing to cut tax subsidies as direct spending, since cutting either would reduce government interference in the economy.

By the same token, Democrats should be just as willing to cut spending as tax subsidies, as long as the wealthy bear a fair share of the burden. Since Democrats end up with smaller government either way, they should focus on progressivity, not the more semantic debate over cuts in tax subsidies versus direct subsidies.

That’s where my compromise comes in. If Republicans would simply empower the president to reallocate the spending cuts, they could eliminate the meat axe of the sequester. Yes, they would be giving up some power, but look how they came out of the last debate, with only tax rate increases and a bloody nose. Forcing the president to choose enables Republicans to run later on how they would have chosen better.

As for Democrats, why not aim their sights at their real target: progressivity? If Republicans let Obama allocate spending cuts, Democrats could get the same progressive distributional outcome as they’d get through tax hikes. And they, too, will have achieved their principal objective. To move beyond budgetary gridlock, each party must figure out what it can give up to get what it really wants. My plan isn’t perfect, but it allows each party to achieve its goals, and it is a big improvement over sequestration.

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on

  • Weekly review of global news and ideas
  • Balanced, insightful and trustworthy
  • Subscribe in print or digital

Special Offer


Doing Good


What happens when ordinary people decide to pay it forward? Extraordinary change...

Danny Bent poses at the starting line of the Boston Marathon in Hopkinton, Mass.

After the Boston Marathon bombings, Danny Bent took on a cross-country challenge

The athlete-adventurer co-founded a relay run called One Run for Boston that started in Los Angeles and ended at the marathon finish line to raise funds for victims.

Become a fan! Follow us! Google+ YouTube See our feeds!