Tuesday, February 26, 2013

The Sequester, the Comfortable and the Super-Rich

By Mike Dorf

With the sequester set to hit at the end of the week, readers might want to ask "how will the sequester affect me?"  Here's a useful state-by-state breakdown of some of the likely impacts of domestic spending cuts, but I think it's fair to say that as in most things, the impact will be felt most severely by those who can least afford it.

There are exceptions, however, and, in particular, one class of exceptions that are likely to be felt by an important group of voters: comfortable professionals like me and many readers of this blog.  How so?  Because air traffic controllers and TSA agents will be laid off, we can expect travel delays.  Or make that further travel delays beyond those we experience as normal these days.  I'll admit (to my shame) that practically my first thought when I read a list of projected cuts was this: "Hmm, I wonder whether I'll have to cut out early from the reception after my lecture next week in order to get to the Atlanta airport in time to wait in a longer-than-usual security line."

Was that thought enough to motivate me to call my Congressman?  Not yet, but one hopes that as the cuts from the sequester are increasingly felt by comfortable folks like yours truly, pressure will build on Congress to end it.

There is reason for pessimism.  After all, the most important constituency for Republicans is the super-rich, and they don't fly commercial at all.

But there's also reason for optimisim.  Presumably the cuts to air traffic controllers will even have an impact on corporate titans flying on private jets.

Moreover, the deal struck to avert the fiscal cliff reveals that the Republican Party represents the merely well-to-do as well as the super-rich, maybe even more than the super-rich.  President Obama's opening bid--the number on which he campaigned in both 2008 and 2012--was to raise taxes on incomes over $200k for individuals and $250k for couples.  But the negotations produced legislation that only raised taxes for incomes over $400k/$450k.  To be sure, in characteristic Democratic Party negotiating fashion, President Obama all but guaranteed that he would set the threshold there even before the bargaining began, but still, the question is why the Republicans took that particular deal.  Why fight for extra take-home money for people earning between $200k and $400k (and families between $250k and $450k), rather than sacrifice those mere doctors, lawyers and medium-sized business owners for tax benefits for hedge-fund managers and casino magnates with incomes in the hundreds of millions?

Conventional wisdom holds that the sequester was supposed to be a double-edged sword, with Democrats pained by the domestic spending cuts and Republicans pained by the military spending cuts.  But with a new breed of Republicans in Congress who care more about fiscal matters than about the military, observers worry that only Democrats are upset about the sequester.  However, if I'm right that Republicans care about the merely well-to-do at least as much as they care about the super-rich, then as the sequester drags on, and air travel becomes truly miserable, pressure will build for a deal.  And that's not even counting all of the pressure for a deal that will come from the misery that will occur if no new appropriation measure is enacted by March 27.