Sequester Update & Obama Pay for Access Controversy

Good evening everybody and welcome to In the News.  Glad you could be with us again today.  There are a couple of things we’d like to talk about today.  We want to start with the Sequester.  The deadline of March 1st has come and gone and there was no resolution to the matter and so we are into the Sequester.  So we’d like to give you guys an update on that, how we got here and where we’re likely to go from this point.   

And we also want to touch on an issue that’s come to light over the last several weeks.  And it’s this issue of pay for access to the President.  The President’s campaign organization has recently transformed into a political organization aimed at helping the President and Democrats in general gain support for their agenda.  And there have been some questions raised about the access to the President that top donors to this organization have been promised.  And so we want to touch on that briefly as well.   

But we begin with the Sequester.  The Sequester has taken affect and it doesn’t show any signs of being reversed as of yet.  You guys will recall that the Sequester is about $1.2 trillion of mandatory across the board budget cuts.  They are a result of the debt ceiling agreement from the summer of 2011.  In exchange for raising the debt ceiling Congress was charged with coming up with $1.2 trillion in deficit reduction.  They had a year and a half to come up with a plan that could get support from both parties.  And of course they couldn’t so the Sequester has gone into effect.   

The idea of the Sequester was for it to be so onerous that no one would actually want it to happen.  It was never meant to be a deficit cutting mechanism, only motivation to force both sides to the negotiating table.

Now the deadline was last Friday and it came and went without any serious effort to avert the Sequester.  And it was curious because it was one of those weeks in Washington where the actions did not match the rhetoric.  Both sides were decrying the Sequester, saying how bad it was and how it needed to be rolled back but no serious actions took place towards that goal.

There were a couple of bills that the Senate tried to pass.  Democrats pushed a plan that would replace the Sequester with a $110 billion deficit reduction bill, evenly split between spending cuts and tax revenues.  Republicans pushed a plan that would allow the President to make changes to the Sequester and have him apply the cuts to whichever programs he wished.  But neither plan was really serious.  They both seemed to be nothing more than attempts at looking busy in front of the American people.  And in the end, neither one went anywhere.

And it wasn’t until Friday, the day the cuts were set to kick in, that the President called a meeting with Congressional leaders.  Friday afternoon.

So obviously the President had made up his mind that he was going to let the cuts kick in.  So here we are.  The Sequester is in effect.  In terms of the effects on the economy you’ve probably become all too familiar with the numbers by now.  It’s estimated that some 750,000 Defense Dept. civilian workers are expected to face furloughs.  Border patrol agents, Air Traffic Controllers, Food inspectors all may be forced to face furloughs.  Some 70,000 children may be forced out of early education courses through the head start program.  Nearly 4 million people may see their unemployment benefits reduced by as much as 10%.  And on and on.

Now there are some programs that are going to be exempted: Social Security, Medicare, and Medicaid are not affected.  Actually a small portion of Medicare will be affected.  There will be about a 2% reduction in reimbursement rates to doctors and hospitals.  Men and women on active military duty not affected.  Veteran’s benefits not affected.  Furlough notices, if there are any, are not expected to take place for at least a few weeks, so that’s a small positive to those who would be affected. 

Now it’s important to note that there is going to be a build up here. Not everything is going to happen at once.  In that way, it is different from the Fiscal Cliff.  And I also saw a couple of stories in the news in which it was claimed that the President was exaggerating some of the effects the Sequester would have on the economy.  For example the President said that janitors in the capitol building were going to be facing pay cuts.  That’s not entirely true.  Sec. of Education Arne Duncan said teachers around the country had already started receiving pink slips. That’s not entirely true.

So was there a little exaggeration by the President?  Yeah, probably.  But I think, that notwithstanding there is going to be an effect to this thing.  As the President said, this is not an abstraction, people will lose their jobs.

So what now?  Well, it seems that neither side is working in any serious way to resolve the matter.  Republicans are saying that the President needs to get serious about cutting spending.  Democrats and the President are saying that any solution can’t just include spending cuts.  Any approach has to be balanced, i.e. it has to include spending cuts and tax revenue. 

Now one thing that was curious to me that happened last week.  I was surprised, that the President basically said that he would take the threat of a government shutdown off the table.  Democrats have not produced a budget in 4 years which is ridiculous.  So the government is funded by what’s called a continuing resolution or CR.  And that basically extends the federal budget at the previous year’s budget level for 6 months at a time. 

The last CR was passed on Sept. 30 of last year for the new budget year and so it’s scheduled to expire on March 24th of this year.  If a CR is not passed the government shuts down.  You may recall that there were 2 government shut downs in the 1990’s under then President, Bill Clinton and the Republican controlled house.  It proved to be disastrous for both parties but a little more so for the Republican Party.  So there was a lot of speculation as to what would happen if we reached the deadline of March 24th without a resolution to this.

But the President during a press conference last Friday said that if a continuing resolution reached his desk before then he would honor the commitments he made and sign it.  But the interesting thing is that many people believed that was his biggest leverage to get the Republicans to negotiate.

It seems that by not playing that card, the President is instead banking on the fact that people will begin to see the effects of this Sequester and put pressure on Republicans to compromise.  So it seems to be kind of a gamble for the President politically.  And in fact the House passed that CR just today. 

So it looks like this thing is going to be left to play out for a while.  And both sides have resigned themselves to winning the blame game instead of solving the crisis.  But I think that both sides should rethink that because if recent polling is any indication, they are both going to take a hit on this one.  Although it’s up for debate which side will get more of the blame, I don’t think either side is going to come out of this clean.  So again we’ll keep you updated and we’ll see how this crisis unfolds.

Now there’s another issue that has come to light that I want to talk briefly about here.  There have been some allegations that the President’s organization, Organizing for Action is basically selling access to the President to its largest donors.  Organizing for Action is a non-profit that is run by former Obama advisers and personnel from his re-election campaign.  It’s headed for example, by Jim Messina, the head of Pres. Obama’s re-election campaign.  Several other former aides sit on its board.

The goal of the organization is to harness the resources that got President Obama re-elected (its 2 million volunteers for example, its 17 million email subscribers etc) into support for advancing the President’s second term agenda.  A worthy goal.  If you or I were President we would want to channel any momentum that we gained from the campaign into governing as well.

The problem lies in access that the group’s personnel have with the President.  It’s reported that top donors to the organization, bundlers who contribute or help raise $500,000 or more were promised quarterly meetings with the President.  A lot of these donors are reportedly angling for appointments to administration jobs or ambassadorships.

This President has made an effort to be transparent.  The administration put up a website for example to show how all of the stimulus funds were being spent for example, the first of its kind.  But this kind of blurs the line a little bit between what is ethical and what isn’t.  And connections like this become all too easy to be misinterpreted or misrepresented. 

So perhaps the administration needs to rethink how closely the interaction between the two bodies should be.  It may well be that it’s all innocent.  But even the hint of impropriety can be enough to undo some of the efforts made at transparency so far.  And when it comes to credibility in government we’re always looking for stories that add more, not take away.

Well thanks for being with us everybody, that’s our show for tonight.  Remember to sign up for our emailing list at www.itnshow.com and get notifications as soon as our shows premiere.  And remember that you can also follow us on Facebook and Twitter @itnshow.  That’s itnshow one word. 

Thanks again for being with us everyone.  Until next time, good night.