The Potential Impact Of Sequestration

MS. DIANE REHM

Thanks for joining us. I'm Diane Rehm. The White House released a report yesterday, detailing how steep across the board cuts in the federal budget would affect programs in every state. If implemented, sequestration could mean furloughs at the Pentagon, longer airport security lines and delays in food inspection.

MS. DIANE REHM

Joining me in the studio to talk about the potential impact, Jared Bernstein of the Center on Budget and Policy Priorities, David Wessel of The Wall Street Journal, Mackenzie Eaglen of the American Enterprise Institute and Susan Davis of USA Today. I'll be interested in hearing your reactions to our discussion. Please join us, 800-433-8850, send an email to drshow@wamu.org, follow us on Facebook, or send us a tweet. Well, welcome to all of you.

MS. MACKENZIE EAGLEN

Hi , Diane.

MR. DAVID WESSEL

Thank you, Diane.

MR. JARED BERNSTEIN

Welcome.

MS. SUSAN DAVIS

Good morning.

REHM

David Wessel, is it too late to reach a deal by Friday?

WESSEL

Yes. There seems to be very little appetite on Capitol Hill, either among Republicans or Democrats, to make the concessions that would be required to avoid something that both sides insist they really don't want.

REHM

Jared Bernstein, do you agree it's too late?

BERNSTEIN

I do, I do. They're dug in, and gridlocked once again appears to be prevailing. The major dispute is around whether -- excuse me -- whether Republicans would entertain revenues, new tax revenues as part of the deal to cancel the sequester, and they have been adamant that they wont. The president and Democrats have said we're going to need both spending cuts and tax increases in the revenue.

REHM

Mackenzie, how do you see it?

EAGLEN

I think that the House Republican leadership redesigned this crises in order to put sequester front and center before the expiration of spending for the federal government and before the next debt ceiling deal, which means that they think they have the upper hand, rightly or wrongly, in this latest stand-off. So I absolutely agree. We're going to pull the trigger on sequester. The question now is does it stay in effect and for how long.

REHM

Susan Davis.

DAVIS

I think that's right. I think the only thing that we're going to see this week is more theatrical than anything practical towards getting a compromise. You're going to see Senate Democrats offer one very partisan alternative this week. You have the president talking about sequester, but I think it's more of what Republicans would probably say. It's more of a campaign-style event to public support for his position. And you have House Republicans who haven't voted on anything at all yet.

BERNSTEIN

If I could just amplify a part of that, what seems to be going on now is positioning yourself, if you're Democrat or Republican, to not get blamed. And so when people start recognizing the human costs of the sequester, and I'm sure we'll get into them, the kind of real-life problems that they'll face, both sides are trying to get -- embed in those people's minds it's their fault or the other guy's fault.

REHM

So Susan, do you see no action?

DAVIS

I think they will act eventually, but I don't think -- the one thing we've learned from a lot of these budget showdowns is they don't really do it until the pressure is really hot and there's a hard deadline. Now, you could argue that Friday is a hard deadline, but the fact that we're not -- probably not going to see the impact of these cuts on March 2. And I think that one -- the next deadline to sort of keep in mind is March 27, which is when the current funding for the federal government runs out and we could be facing another shutdown (word?).

REHM

So, David, what happens March 27 or by March 27?

WESSEL

Well, I think there's two ways to answer that question. One way is to talk about the plumbing of the federal budget. And the reason Sue mentioned March 27 is that's the day that the government runs out of authority to spend on what most of us think are the ordinary operations of government. It won't just be a cut in agencies. We'll see agencies being forced to basically shut down all but essential operations. We've seen this, unfortunately, before.

WESSEL

I think the second way to look at it is are we going to have a month of jacking for a position, of finger-pointing, of confusing, dueling statistics? And does -- is there some political backlash? Either is there is some widespread public disgust that why can't our leaders do business with each other, why can they compromise, or is there some second thoughts in the Congress about whether they are really putting their own reputations and their re-elections at risk?

EAGLEN

To Susan's point, if -- this is a gamble both parties are taking. On the left is that the sequester will actually be painful for most Americans. On the right, it's that they'll greet it with a shrug and say, what's the big deal in my everyday life? Therefore, we can live with this. And nobody knows the answer to that. And that answer, however though, will determine whether this gets turned off or re-adjusted as part of the government funding debate or perhaps later this summer in the debt ceiling.

BERNSTEIN

You know, I think I see it a little differently from my colleagues in the following sense: I don't view this as kind of government trying to work out some substantive differences in ways that I recognize, having watched this process for many decades now.

BERNSTEIN

I view it as pure deep government dysfunction constantly creating self-inflicted wounds, setting fiscal time bombs, manufacturing crises that are totally unnecessary at great cost to an economy that's already too weak and all the people in it. I mean, it's easy to forget that the unemployment rate is still about 8 percent. If this sequester goes in and sticks, it's going to stay at 8 percent. It could even tick up a touch.

EAGLEN

I think it's also one thing that's important for people to remember when we talk about this -- and it's probably going to be at least for the next couple of weeks we're talking about it -- is that if deficit reduction is the goal and that's the aim of this whole debate, the sequester is not even really that good of a policy to do that.

EAGLEN

I mean, part of the drivers of the deficit and what's really the long-term fiscal problem is not touched in the sequester. Entitlement programs, Medicare for the most part, is left out of it, Social Security, Medicaid. So we're not even having the really ugly discussion yet. This is really much more of, like you said, a partisan fight.

BERNSTEIN

And by whacking economic growth, you're -- you actually are potentially hurting your deficit reduction goals because one way to reduce the deficit, the best way right now, actually, is to get the economy growing again.

REHM

David Wessel, is the White House exaggerating the danger of allowing these cuts to go into effect?

WESSEL

Maybe. The White House certainly has an incentive to exaggerate the effects. I think one thing that they may have miscalculated on is they said that the roof will fall in on the economy if these - if the sequester, the across-the-board cuts take effect on March 1. We now know that it's not going to happen all at once. So on March 7 and 8 and 9, there's not going to be longer lines at the airport. And I think that they may have misled people, unintentionally perhaps, into thinking that that would happen. On the other hand...

REHM

But what about by March 31?

WESSEL

On the other hand, there are -- it's not like there are no effects, like there's some unemployment benefits, emergency unemployment benefits will be shaved. And also, when economists were doing projections of the effect of the sequester or when you were talking to people on Wall Street, they basically thought, oh, this would go on for a couple of weeks and then they'll fix it. Now, what we're beginning to see is a growing sense that the spending levels on the sequester may be extended for the whole year.

WESSEL

Maybe there'll be some moving around of the pieces so it's not so inflexible, and that will actually show up in the economy. As Jared said, it'll reduce growth. It'll reduce the deficit in the near term. But as Sue says, it won't do it in the long term. And I think that the cacophony, as Jared says, is going to undermine people's confidence in the government, and Lord knows there's not a lot of that to begin with.

REHM

Ok. You're talking big items. You're talking about defense spending. You're talking about entitlements. You're talking about large things. What about our everyday lives, Susan?

DAVIS

I think the best example and the reason why you hear it cited most often when we talk about this is airports because it is something that does affect a lot of Americans, at least, or at least people that know people that travel. I think that's why you saw Ray LaHood come out on Friday, issuing a very stark warning about having to close as many as 100 mid-sized airports.

DAVIS

I don't think we would start to see that crunch if it does happen until April because for a lot of this, we wouldn't feel until April. For a lot of these employees that will be furloughed, then this is it. This is jobs. This is a real number. They have to be given 30- or 45-day notice that they're going to have to take a furlough. So your TSA employees, your air traffic controllers, this is when you feel it.

DAVIS

Erskine Bowles who was the chairman of the president's fiscal commission made a joke, and it's a joke but there's a little bit of truth into it that you might start to see action when the lines at Reagan airport are four hours long and you have lawmakers waiting in long lines to get home. And that's when you might start to hear it. It's -- will it be a market-forcing event that happens that forces Congress to act? Or could it just be something like public outrage: closing the Washington Monument, long lines at airports?

WESSEL

The Washington Monument is already closed because of the cracks.

DAVIS

Well, that's true.

REHM

Yeah, that's true. That's true. Mackenzie.

EAGLEN

With the exception of the Department of Defense, most federal government agencies have the majority of their budget wrapped up in personnel. And so, of course, security screeners at the airport, air traffic control tower workers are affected. But also everything from IRS agents to the border patrol to FBI, guys out on the beat, this is the impact number one.

EAGLEN

In the Defense Department, people will certainly take a big hit. But the impact is really going to be felt across the board on the war fighter, on the guy forward station, even in Afghanistan. There really is no exemption from Defense Department readiness and shortfalls across the department.

REHM

So if you've got the IRS with taxes due April 15 and the IRS is one of the agencies that's going to get hit, how is that going to work, Jared?

BERNSTEIN

I think it's going to work the same way many of these cuts are going to work in people's lives. You're going to begin to see slower services from a lot of functions in our daily life that we depend on and don't think about much. Think about food inspection, OK? That's not something we kind of think about the process too deeply all the time. If you have -- and you will have because you're going to have to furlough them --- fewer food inspectors, that doesn't mean that you have less-inspected food. It means that the process of inspecting food slows down. Things get out the door a lot more slowly.

REHM

But isn't this what Republicans wanted all along, smaller government -- fewer things to offer the American people, fewer services? Sounds as though they're going to get exactly what they asked for, and sometimes you got to be careful. We'll take a short break here. We'll be right back.

REHM

And we're back, talking about what happens if the sequester, which is due to go into effect this Friday if the Congress takes no action. Here in the studio: Susan Davis of USA Today, Mackenzie Eaglen of the American Enterprise Institute, Jared Bernstein of the Center on Budget and Policy Priorities and David Wessel of The Wall Street Journal, who is waiting to answer my last question.

WESSEL

So, Diane, I think that's actually a little unfair. I think that serious Republicans who want to cut spending don't want to do it in the way that, as Erskine Bowles and Alan Simpson put it, is mindless and stupid. This is a way to cut spending that makes no sense even to the small government Republicans. Everybody believes that we need some government, and nobody in their right mind would cut everything.

WESSEL

There are things in here that Republicans would like to spend at least the same amount on. The problem is that they see this as a lever to get the agreement on smaller government that President Obama is resisting. And I think both sides have a little bit miscalculated. Each side thought the other side would flinch, and they're not flinching.

WESSEL

So we're going to get the worst of all possible worlds. We're going to get a very abrupt cut in spending over the next seven months. It's not going to be setting priorities. It's going to be the opposite of setting priorities. And it's going to be done in a way that makes the Congress less functional and the players in Congress even less willing to negotiate.

BERNSTEIN

You know, I mean, there definitely are Republicans who share David's view. But I have heard and debated one-on-one, in person, Republicans who say, not only am I for the sequester, but I don't think this sequester is large enough. Rand Paul is one. I mean, there are a number of Republicans going around saying, this is -- let this happen. It's not going to be a big deal. Let's do it precisely for the reasons you suggested. That's not to say that there are probably a majority of people in the Republican Party who represent David's view but many who don't.

EAGLEN

What the Republicans really want is a focus and a place where they have little leverage, which is on two-thirds of the federal budget and the entitlement spending for Social Security, Medicare and Medicaid. They can't seem to get that in any sort of debt ceiling deal or fiscal cliff bargain with the president. And so, therefore, the only thing they have got right now in their pocket is this threat of sequester. It does reduce federal spending. But it's a small portion of that pot of money. They would much rather have a conversation about the other federal spending priorities.

REHM

Then why don't they?

WESSEL

That's a really good question.

EAGLEN

Part of the problem is that, apparently, during the...

BERNSTEIN

Sounds so simple.

EAGLEN

...fiscal cliff negotiations with President Obama, the speaker couldn't get the president to go back and bring the deal that was -- they had in the summer of 2011. And there were some entitlement changes that would've saved money over 10 years in that deal. And so they felt that the president pulled the rug out from under them and they simply want to get some of those back on to the table.

BERNSTEIN

Is it not the case, though, Mackenzie, and I ask this -- is it not the case, though, that the fact that Republicans are refusing to entertain further tax revenues is what's creating this gridlock right now? As I understand, the president's deal involves more spending cuts but also more tax revenues. And Republicans are saying, no way.

EAGLEN

Right. And to that point, it's a mirror of what you said about a lot of conservatives. For that reason, a lot of liberals have said they, too, can live with the sequester. It's not ideal, but it is a significant volume of defense cuts. They couldn't get any other way. It might put the economy in a mild recession. Members like -- leaders like Howard Dean and Patty Murray have said this. But they could live with it if it's not going to get them tax increases. And there you have the deal where no one's going to compromise.

WESSEL

But I think the problem with the Republicans is that the only thing they can agree on is that they don't want to cut a deal with President Obama and if the president could somehow get them to say OK, put your -- here are my cards. And let's be fair, the president has, in recent days, begun to talk again about his affection for something that liberals don't like, this change in the way we adjust tax brackets and Social Security benefits, the so-called Chained CPI.

WESSEL

I'm not convinced that the Republicans have a uniform agreement as to what deal they would like to strike with the president. And that makes this even harder.

REHM

OK. Let's talk about cuts in personnel to the Defense Department, Susan.

DAVIS

And this is one of the more interesting -- and we can talk about the politics of this as well. As many as 800,000 civilian personnel furloughs is what the Pentagon is saying, and the Pentagon has been obviously very forceful in opposing these cuts and saying Congress needs to find another way to do it. I think what's really interesting here -- and the politics of it is part of the reason why nobody ever thought this was going to happen -- is Democrats kind of figure that there was no way Republicans would ever let this level of defense cut go into effect.

DAVIS

And the willingness of many Republican lawmakers now to say we're willing to go over this deadline and face these defense cuts for the broader argument of fiscal restrain. I talked to a congressman named Austin Scott. He's a Republican from Georgia. He has five military installations in his congressional district. It's one of the most concentrated military districts in the country.

DAVIS

And he said, well, what do you way to your constituents? And he said, you know, he would argue that they get it, that there's awareness that we need to trim -- that we need to reduce the deficit. And he kind of said, you know, we might just need to see more neighbors helping neighbors. If kids are taken out Head Start programs, maybe their neighbors will help to, you know, watch their kids after school, that kind of thing and that the country's more resilient and that they're willing to stomach these cuts. And that's just sort of fascinating position for a Republican lawmaker to take.

EAGLEN

The groundwork for this was laid years ago. But it predates President Obama where the Republican Party was willing to throw defense spending under the bus. And the president should've know that when he -- when the White House staff proposed this as part of the Budget Control Act originally 18 months ago.

EAGLEN

The Republican Party is divided between defense hawks and fiscal hawks. And together, that's a losing proposition when you're trying to cut a deal with the president. That's part of the reason they cannot a deal as internally, they don't have an end goal in mind that they can all agree upon.

REHM

Interesting. The White House put out a paper yesterday with lots of different impacts. I have in front of me Georgia, Jared Bernstein, which talks about taking more than 28 million in funding for primary and secondary education, taking away education for children with disability, taking away work-study jobs, Head Start programs on and on.

BERNSTEIN

Right. I have California in front of me. I also have this region, both of great interest, of course. I mean, California is -- if you're looking at their school system, which is pretty massive, it's going to lose about 90 million under the sequester, affecting primary and secondary education. And that's if the sequester hits and sticks. And that's about 1,200 teachers and teacher's aide jobs that would be at risk, affecting about 190,000 students. So these things get very amplified.

BERNSTEIN

Around here, where -- just like Sue was saying, in Georgia, around here, of course, we have lots of defense -- DOD employees, the civilians. By the way, the uniform personnel and people serving overseas would be exempted from this. But uniform personnel would start to see furloughs. And the way they're...

WESSEL

No, non-uniformed personnel.

BERNSTEIN

Sorry. Non-uniform. And the way they're talking about furloughs is like a day a week. So it's not like people would be talking...

REHM

Totally without income.

BERNSTEIN

Yeah. So for a day a week for the course of the sequester.

REHM

Right.

BERNSTEIN

And that's got to be very disruptive, of course, to people's lives...

REHM

Pretty tough.

BERNSTEIN

...and to the work that they do.

REHM

Here's an email from Lindy in Dallas, who asks, "Is there a mechanism other than waiting for the 2014 elections for the American people to insist that the salaries of legislators be the first cuts made prior to any other listed in the sequester provisions?" She goes on to say, "When my children fight and waste time instead of doing their chores, they don't get any allowance money." David.

WESSEL

I think the short answer is no. And frankly, I'm not sure that's really what this is all about. I mean, let's say we zeroed out all the -- well, Congress has decided that they're going to withhold their pay if they don't get budget resolutions through the House and Senate by April 15. But let's be honest. So then we'll have only the rich people in Congress, the ones who can do without a salary. Look, I think the American people have some say here.

REHM

And that's what President Obama is reaching out to.

WESSEL

Right. So, you know, members of Congress are people who listen to their constituents. And if every member of commerce -- Congress was having his phone lines swamped with people who said, just get on with it, I don't -- not everybody can get their way here, there would be -- there is ways that people put pressure on them. I think that that hasn't happened yet. And as you point out, the president is doing everything he can to blow on the embers here. But people are so turned off by Washington that they just say a plague on all their houses.

REHM

All right. I'm going to open the phones, 800-433-8850, first to John in Miami, Fla. You're on the air.

JOHN

...you for having this, and thanks for having this discussion. I have to say I'm a air traffic controller in Miami. And without going into my personal situation or the personal situation of each individual employee, I have to say I think the most concerning thing about this whole sequestration matter is that no one knows about it. I can't tell you how many people I've talked to who don't even know that this is happening.

JOHN

And that's so disturbing, and I think part of it has to do with, like your guests have been saying, just people just generally continue to discuss the government's inability to do things. I mean, that's just how it's perceived. But, you know -- and then on a personal level, I just have to say, seeing the internal things that are coming through just from the Department of Transportation and Federal Aviation Administration side, you know, it's really concerning.

JOHN

I mean, it's not -- I mean, you're talking about shutting down airport control towers and taking away midnight shifts for -- from facilities. I mean, that's, as far as I'm concerned, that's not acceptable. I mean...

REHM

I fully agree with you, John. Susan, what kinds of reactions do you get to the articles you've written about sequestration?

DAVIS

I have two things I thought of in his comments. I don't disagree that a lot of people, when they hear the word sequester, don't know what it means. But I have found in reporting, particularly outside the Beltway, is people are increasingly aware of the debt and the deficit and the fiscal situation broadly.

REHM

Something going to happen.

DAVIS

The other thing he said that I do think he raises a good point about people not really understanding what's going to happen is that, for the past two years, we have been in an almost permanent cycle of self-manufactured crisis by Washington about the budget, about defaulting on our debt, about shutting down the government, about the fiscal cliff in January. And there's a sort of perpetual noise coming out of Washington, and they always seem to fix it, right?

DAVIS

We always get an 11th hour deal, and it always gets done in the end, and people don't see it translate into their everyday life. And in this situation, it is the -- this is a very inarticulate metaphor, particularly for the current political tide, but there's this element of if you're constantly threatening to shoot the hostage, eventually you're going to have to shoot the hostage to sort of remind people of what the argument is about.

DAVIS

And I hear that argument in Washington, that maybe you need to let people see what the effect of the federal government is in their day-to-day life in order to really get them motivated, to get their lawmaker motivated.

REHM

David, you've been on this program many times, talking about the budget deals, even sequestration. I've never seen you looking quite so discouraged.

WESSEL

I am very discouraged. I can't bear the thought of writing another story about some ridiculous manufactured crisis where we have some of the best journalists in America trying to figure out whose fault was it that we found ourselves in this cul-de-sac when we have so many arguments worth having. Jared mentioned the fact that we have almost 8 percent unemployment.

WESSEL

We have 3 million people who've been out of work for a full year or more and are still looking for work. We have big questions about how to redo our health care system. We have conversations about pre-K education we ought to have. Instead, we're arguing about this stuff.

REHM

David Wessel of The Wall Street Journal, and you're listening to "The Diane Rehm Show." Thanks for your call, John. Let's go to Cleveland, Ohio. Shawn, you're on the air.

SHAWN

Good morning, all. Thanks for taking my call.

REHM

Sure.

SHAWN

I started out with your screener about, again, how do we get Congress to understand -- you know, we're talking about people taking furloughs. A day off a week, that's 52 days. That's a lot of money in some people's pockets, and...

REHM

You bet.

SHAWN

...one of your panelists point out there's a lot of rich people in Congress, which is amazing. So there's such a disconnect. How would they understand? And just recently, when the other -- you know, from an email, one of the panelists mentioned, you know, let's take the hostage instead so everybody understands. That's ridiculous. We're an intelligent society. Why do we have to show everybody like we show on TV?

REHM

All right. And let me offer another perspective, an email from John in Indiana, who says, "The sequester amount is only about 7 percent of federal spending. When the media -- i.e., you and me -- talk about it, you make it sound like it's 50 percent or something. Seven percent is tiny." The emailer goes on to say, "I think your perspective is way off." Susan.

DAVIS

Nobody -- in the beginning -- it's important to remember that there was broad agreement that the country could sustain 1.2 trillion in deficit reduction over the 10 years. The goal was to do it in a smart, targeted, prioritized way, and they failed to do that. So now -- because they failed at that, now they're doing that in this across-the-board, inarticulate, what the president called a meat-ax approach. So I don't think there's a question that the number is not something we can sustain. It's how we're doing it that is bad for the country.

REHM

Mackenzie.

EAGLEN

And both the caller and the emailer are right. Those furloughs are going to have a real economic impact and an immediate hit. They're going to take money out of local economies. And also this is a relatively small amount of spending that does probably need to be reduced, but therein lies the problem. It's that everyone agrees that these numbers need to come down, but the Budget Control Act was written without flexibility.

EAGLEN

That's the keyword -- to decide and to prioritize. Once that's introduced -- and hopefully after the trigger is pulled -- it would be cooler heads will prevail at the White House because the White House will be in charge on that decision. Once you give agencies flexibility, they can then move to lower priority items to cut.

BERNSTEIN

I don't think the conversation -- including the caller's point, which is a reasonable point -- has yet reflected all of the fiscal contraction in the 2013 economy. That means all of the spending cuts that are coming into play right now in an already too fragile economy, the payroll tax break, which expired, starting Jan. 1, takes over $100 billion out of people's paychecks, affecting almost every worker out there.

BERNSTEIN

Add to that $85 billion in spending cuts from the sequestration. Add to that, by the way, about something around a $40 billion kind of a pseudo-tax from higher gas prices that have prevailed. And that part is not a fiscal drag, but the other two parts are. And you get a sense of all the headwinds pushing against an economy that's already kind of wobbly.

BERNSTEIN

I mean, I sort of think of it as a bicycle that's trying to get some momentum. Our economy hasn't been able to do so. We're taking a lot of air out of its tires. So while you can find evidence that these cuts are relatively small, the point is that they're all going in exactly the wrong direction.

REHM

Jared Bernstein, he's senior fellow at the Center on Budget and Policy Priorities, former chief economist, economic policy adviser for Vice President Joseph Biden. Short break here. More of your calls, your email when we come back.

REHM

And welcome back. Here's an email from Mark, who says, "I work for the National Park Service, Department of Interior, and was informed that all students would be furloughed if the sequestration occurred. The NPS I work at uses many students. One-quarter of my division will be furloughed. If sequestration takes place, toll on students depending on these jobs to pay tuition and exist is severe." David.

WESSEL

Well, look, somebody is going to not get the money they were expecting if this thing takes effect. And there isn't any doubt that it'll be bad for those people. And it isn't any doubt that it's going to -- it's -- as Mackenzie said, it's so inflexible that agencies will be cutting things that they would rather not cut, and they might be alternative cuts. I think some of this is actually showing up already. One agency head I talked to said he is not filling vacancies in his agency.

WESSEL

We know that some defense contractors anticipating that defense spending is on the way down are kind of accelerating their pulling back. So it's -- there's not doubt that it's going to inflict some pain on people. I think the question is why -- and I think people wonder this, why would Congress want to do this? I mean, really, most members of Congress are patriotic people who do not want to go out of their way to screw their constituents.

WESSEL

There may be some exceptions on that but for the most part. And I think that that's the thing that's so frustrating here, that they thought they were forcing themselves to do something better by making this into a nightmare. And now they seem to shrugging their shoulders and saying well, there's nothing we can do. We're going to have to live the night.

REHM

Here's an email from Jackie here in D.C., who says, "This is all about 2014 for both parties. Each party thinks it will benefit from the disruption and is willing to gamble the lives of people they don't know or identify with to prove their bona fides."

DAVIS

I don't know if I agree with that. And I have often had a very cynical view of politician's motivations. I'm not sure anyone's mind is really on 2014 yet 'cause I'm not sure -- a lot of times in politics, you know, motivation, it's when you start to think that something's actually going to flip, and we're not there yet. I also think -- I would say to the political point, I think of it more as there's -- it's more of a lingering bad taste from 2012 and the debates in the last Congress. I do think that beyond all this, there is a very fundamental, philosophical divide between the two parties right now.

DAVIS

There isn't a tremendous amount of central-middle where there's like, well, you know, there's a lot of agreement on a lot of these issues if we could just get around the bigger picture. There's a very different view about what role the government should play in our society, what role -- how much money we should spend on these programs. And there is not much agreement between them. So I don't really know how this is going to play out, but I think they're driven very sincerely.

DAVIS

When you talk about these lawmakers, the very conservatives, very liberals, when you talk to them, I don't -- they have very strong conviction. And I think that they believe a lot of times that the other lawmaker, if they were to compromise with them, they would be giving in something fundamentally much more dangerous than just a political election.

WESSEL

So I was actually waiting for that word that Sue just said, compromise. We have lived through periods of great disagreement between the parties. But historically, when it came time to actually serving the nation, when it came time to kind of fixing our wounds instead of self-inflicting them and making them deeper, people with very different views got together and compromised. And that's what's missing. That's the secret sauce, the ingredient. This is not rocket science. That's what's missing.

WESSEL

When one side says -- and this is the present enigma. It says here's a package of spending cuts that you want and tax increases that we want that's compromised. When the other side says, absolutely not, no tax increases, only spending cuts, that, to me, is the absence of compromise. And I don't -- it's appealing to say there's a pox on both their houses. I don't think that's accurate when it comes to the compromise issue.

REHM

Mackenzie.

EAGLEN

Susan's right on the deep philosophical divide in the conviction both sides have in wanting to cut a deal or not. And David made a great point too. The American people have a role in this in weighing in. And when they did weigh-in in the last election, they returned the status quo to Washington so members are left looking around saying well, I was voted back into office, so therefore, I'm going to keep holding on to these convictions. And that's part of the problem right now.

WESSEL

So it's the voter's fault?

WESSEL

Look, I think that -- I'm a little more cynical than Sue. I think there is some jockeying for position. Republicans want to come up with the new strategy so they can do better. The president clearly is interested in building the Democratic base in the House and the Senate. I think that if they were talking about the philosophical disagreements, I wouldn't be so glum. But they're not. I don't think that the -- I know the president is very angry at the press when he says -- well, he thinks we have to blame both sides.

WESSEL

But, you know, the fact is that the part of -- part of negotiating with your opponents is trying to give them some kind of exit and not -- and make them feel that you can do something and they're not going to be excoriated. And whatever his gifts, the president has not managed to do that. It's not all his fault, but I don't think that this is only a Republican.

REHM

We need to call on Joseph Nye at Harvard, who wrote Getting to Yes." Let's take a caller in New Carrollton, Texas. Good morning, Jim. You're on the air. Where are you, Jim? Not there. Lets...

BERNSTEIN

He gave up in disgust.

WESSEL

He's furloughed.

REHM

Yeah. Let's go to Sandy...

WESSEL

He was furloughed.

BERNSTEIN

His phone was cut off.

REHM

…in Peoria, Ill. Good morning.

SANDY

Good morning. I was wondering if it would help the situations like this if we had term limits for members of the House and the Senate, if they would be more interested in getting their jobs done and getting re-elected, if that would help.

REHM

Susan.

DAVIS

In short, no. And I think that the debate over term limits, there are still some advocates for it but I think it's largely settled. I think elections are term limits. I think in a democratic society, elections are term limits. But to caller's point, I wrote about this recently, term limits aren't necessarily the problem. And because of elections in the last three cycles, about 40 percent of the House has only served three or fewer years. So the entrenched incumbents are not necessarily the problem.

DAVIS

In the Senate, there's been about a 44 percent turnover rate since 2006 because of retirements and other reasons. So the idea that the problem as these lawmakers that are entrenched in Washington, that is not necessarily the problem. I do think part of the problem is that we have created an environment in which it's easier to get elected and stay elected if you appeal more to your party base than to a broader electorate.

REHM

All right. To Takoma Park, Md. Good morning, Francisco.

FRANCISCO

Hi. Good morning, Diane.

REHM

Hi.

FRANCISCO

I am actually in the military. I work at Walter Reed in Bethesda, and we take care of many wounded warriors that are rehabbing from traumatic injuries. The sequestration, from what we've been told, is civilians. GS employees will be furloughed 32 hours a week. Military personnel, we're going to work about 20 to 50 percent more per week. And our contractors are paid through July. But after that, we won't have them.

FRANCISCO

We really rely on the civilian personnel to provide care to our wounded warriors, and we've been mandated to provide world-class health care for them. And I don't feel that anybody is talking about that. And I'm really concerned with the level of care we'll be able to continue to provide then if we don't do something.

REHM

That's really important. And thank you for the work you're doing, Francisco. Mackenzie.

EAGLEN

This is definitely something that's not rising to the surface. Even though the president declared earlier in the year that he would exempt military personnel paychecks from the sequester as well as the entire Veteran's Affairs Department and all of those people who work there, what's missing in Washington is this understanding of the ripple effect that it will have.

EAGLEN

And you still are going to hurt your service members currently serving active duty. You're going to hurt their families. You're going to affect their benefits and reduce them whether that is health care or, you know, base amenities. And you're certainly going to cause them to work more to make up for the slack and other workforce reductions.

REHM

And here is an email to follow up on that from Amy in Virginia. She says, "There are many contractors to the military here in Virginia. They are not just losing a day a week. Hundreds of jobs are being cut now because contracts will not be continued. I've heard about many, many rifts that have already happened. Even folks who are working today on a contract literally won't have a job when the contract runs out. Future contracts are being tabled, so this will be felt for a year or more." Is that when everybody starts paying attention?

WESSEL

It could be. I mean, as you know, Diane, I've talked about this on the show before. Most of the money that the federal government takes in does not go to pay government employees. It goes out in the form of benefits, grants to state and local governments and contracts. The benefits are largely not entirely exempt from this across-the-board spending cut. But contracts and grants to state and local governments will be affected, and they will be affected soon if this goes on for more than a few weeks. It'll show up.

REHM

To Whitsett, N.C. Good morning, Matthew.

MATTHEW

Good morning. I heard from a congressman that the sequester, if it goes into effect and stays in effect, will not affect the growth of the federal government by $1.6 trillion over the next 10 years, that the government will continue to grow in that size. Are we aware of that? And that's my question for today's panel. I'm a regular listener. I really like the show. I often have the question of whether the drug war is pertinent and the increase in drug war spending when listening to the show. I think that's also appropriate for today.

REHM

All right. Jared.

BERNSTEIN

The sequester amounts to over a trillion dollars in spending cuts over the next nine years or so. If the sequester sticks, that means that there'll be that much less spending. Now, over the next 10 years, the government will grow, the population will grow, baby boomers like me will hopefully age and...

WESSEL

And collect benefits.

BERNSTEIN

...and collect benefit, you know, Medicare. So it's baked into the cake that government functions will have to expand to meet increasing demand. But let's be clear. The sequester, if it holds and sticks, really does reduce spending by over a trillion dollars. By the way, add to that, the $1.5 trillion in spending cuts that Congress and the president have already legislated having nothing to do with the sequester. So if these spending cuts have occurred, the government will grow, but it will grow more slowly.

REHM

All right. To Gideon, Miss. Mo. Good morning, Greg.

GREG

Hi. How are you?

REHM

Good. Thanks.

GREG

My -- I keep hearing people say there's a difference in the Republican and Democrat and there's not. They created this situation over the last 50 years with their globalism and exporting our jobs. They created an unequal tax system. There are fewer people working today than there were four years ago. And the people who are working today are drawing less money than they were four years ago. They created this problem, and they're not going to solve this problem.

REHM

Mackenzie.

EAGLEN

Well, I think that's a point worth considering. These problems that we're facing right now and this immediate fight and this crisis governance have been manifesting and simmering, many of them, in -- for years, and so, for example, on check entitlement growth, fencing an off and previous deals, the lack of willingness by politicians to tackle certain big questions until the crisis is right in front of their face whether they created or not, that is something perpetual to Washington. I don't think it's going to change. We've only seen the trend get worse in the last several years.

REHM

And you're listening to "The Diane Rehm Show." And here's an email from Robbie in Baltimore. "One of your guests mentioned that we'll -- all we'll get this week from Congress is theater. Who are they performing for? Not voters. We -- they will forget the details come the next election. They are performing for the super PACs, who will fund the next crop of attack ads. Just another example of why we need comprehensive campaign finance reform." What do you think about that, David? Would that have helped?

WESSEL

Well, I'm kind of sympathetic to the point -- the writer's point of view. I know who they're performing for. They're performing for me and so with the TV cameras, right? So that's pretty clear. I think that when you've try and diagnose how has this situation gotten so out of whack, there are a couple of things. One is that the country is kind of conflicted.

WESSEL

Doug Elmendorf, the director of the Congressional Budget Office, has said that the fundamental problem is Americans want more in benefits largely for the elderly than they're willing to send to Washington in taxes. But a second thing is this whole question of how we draw up congressional districts and the role of money in politics.

WESSEL

We've seen just recently in the last legislation, the fiscal legislation, these special deals to bailout certain health care providers so they could get more money for Medicare. There is no doubt that the amount of time that members of Congress spent on raising the money and the implicit, if not explicit deals they make with campaign contributors are making the situation harder to fix.

REHM

So from all of your points of view, what or who is going to be hardest hit if these Democrats, Republicans, the White House, the Congress do not reach agreement? Jared.

BERNSTEIN

As usual, the most economically vulnerable families are most vulnerable to these kinds of cuts because they don't have the savings and the incomes to fall back on. So when you're talking about tens of thousands of kids losing their Head Start slots and the child care assistance, that's going to be big. But I think that's going to be much broader than that. Lots of us -- I travel a lot. Lots of us are going to be very much inconvenienced. Areas that have a lot of civilian military personnel are going to be very hard hit. Those are at the top of my list.

REHM

David.

WESSEL

I think that the bigger issue is the effect it'll have on the overall economy, whether the ripple effects will come at a particularly bad time for the economy. It'll show up in unintended consequences that we can't even imagine today.

REHM

Like what?

WESSEL

Well, the ripple effects. A contractor decides not to hire workers. And as a result of that, somebody loses a job. And as a result of that, someone gets behind on their mortgage and stuff like that. As Jared has pointed out, we do not have a very strong economy. We need to find a way to restraint spending, but we have a good example. Look at the U.K. If you do too much, too soon, you hurt your economy.

REHM

Mackenzie.

EAGLEN

Part of the foundation of our economic strength is peace and prosperity. They tend to go together, and so maintaining that global peace is important for Americans and our military and our intelligence agencies, our State Department. A lot of federal agencies are engaged in doing that every day.

EAGLEN

When you're starting to threaten that stability or reduce power price in subs, ships or aircraft or people around the world in the military and sending a signal that we're somehow weakened by these problems in Washington, the last thing we need is some kind of terrorist or other crisis to make this even worse.

REHM

Susan.

DAVIS

I absolutely agree that the most vulnerable, from wounded warriors in Walter Reed, to people that rely on the federal government, are going to be affected most. Second, I would just say -- and it kind of goes to David's point about long-term effects -- so much of this debate is about making the country better for the next generation. And I do think sort of the people starting off, the millennial, the recent college graduates have really high unemployment. What does this doing for their generation is going to be really interesting.

REHM

Well, I want to thank you all, Susan Davis, Mackenzie Eaglen, David Wessel, Jared Bernstein. I'm not giving up yet.

WESSEL

Me either.

EAGLEN

Me neither.

REHM

I think we might get it just because we might. I'm going to keep my fingers crossed.

BERNSTEIN

And then David can write more interesting articles.

REHM

Exactly.

WESSEL

Yeah.

REHM

Thank you all so much.

EAGLEN

Thanks, Diane.

REHM

Thanks for listening. I'm Diane Rehm.

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