The Lindbergh-Baby Economy

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TRB FEBRUARY 25, 2013

The Lindbergh-Baby Economy The sequester wasn't some sneaky Obama ruse. It was ransom.

On March 1 (i.e., this Friday) $85 billion will be sliced, more or less indiscriminately, from the discretionary portion of the federal budget. Everybody agrees this is a bad idea, which it is. But whose bad idea is it? Bob Woodward of the Washington Post and Jackie Calmes of the New York Times both say it came from the Obama White House—specifically, from Jack Lew, President Obama’s nominee for Treasury secretary, who at the time was Obama’s chief of staff. That’s true in roughly the same sense that it was Charles Lindbergh’s bad idea eight decades ago to fork over the equivalent in today’s dollars of $840,000 to a German-born carpenter named Bruno Hauptmann. Faulting Obama for inventing the sequester is like faulting Lindbergh for inflating the local price paid for carpentry work in Hopewell, N.J.

The sequester was a ransom payment. Calmes mentions that the sequester “won Republicans’ support for increasing the government’s debt limit in 2011, and averted the nation’s first default,” but she doesn’t dwell on this point. Woodward mentions it not at all.

We can argue about whether it was wise for the Obama White House to pay ransom to persuade Tea-Party-inspired Republicans to permit a routine debt-ceiling increase on which the world economy depended. In his book The Escape Artists: How Obama’s Team Fumbled the Recovery, my New Republic colleague Noam Scheiber makes a persuasive case that the White House was foolish ever to signal, as it did in mid-April 2011, that it would permit deficit reduction to become part of a debt-limit deal. Then, as now, Obama was willing to cut entitlement programs like Medicare, provided these were balanced out with tax increases. Then, as now, House Republicans refused any deal that included a tax increase. And then, as now, House Speaker John Boehner was not really in control of his caucus as time was running out. So the White House essentially folded, agreeing to $900 billion in spending cuts over ten years; empowering a congressional “supercommittee” to find an additional $1.2 trillion in deficit reduction; and stipulating that, should the supercommittee not achieve its goal (as of course it did not), the cuts would be made in automatic and indiscriminate fashion, half from the defense budget and half from the domestic discretionary budget.

Lindbergh drove a harder bargain than Obama did. Hauptmann demanded a current-dollar equivalent of $1.2 million, but he got only $840,000. The House Republicans got $2 trillion in spending cuts, which is what House majority leader Eric Cantor had repeatedly said he wanted, and they avoided the tax increase they didn’t want. (The “fiscal cliff” deal in late 2012 did include a tax increase on incomes above $450,000, but that was a separate confrontation, and was actually the cancellation of a long-planned, previously-legislated tax increase on all incomes.) Except for having to accept defense cuts in lieu of entitlement cuts, the Republicans got all the ransom they demanded.

On the other hand, Lindbergh’s partial payment to Hauptmann failed, tragically, to save his young son’s life. Obama’s full payment to the Republicans did avert a default on U.S. Treasuries and the onset of a global depression.

On yet another hand, the unappeasable Hauptmann eventually was captured, tried, and executed for his crime (although there’s been some debate over the years about whether they caught the right guy). The House Republicans are still at large, which is why the economy is still in peril.

Coda. Another difference—one not relevant to the point I’m making here, but nevertheless worth clarifying—is that Lindbergh later evolved into a dangerous Nazi sympathizer and would have made a catastrophically bad president, as Philip Roth and others have pointed out. President Obama has his faults, but overall, I think, is a good president.

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posted in: politics, barack obama, john boehner, sequester

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