Ever since the election, Republicans have been frustrated by their lack of leverage against Obama. Taxes would have gone up by $4.5 trillion on Jan. 1 if nothing was done, so Republicans were forced to agree to limit the damage. If there were no increase in the debt limit, any economic chaos that followed would have allowed Obama to blame Republicans and distract attention from the problems posed by the nation’s mounting debt, so they agreed to suspend it — a strategy I had described as Maneuver X.
Now Republicans have turned the tables on Obama. If nothing happens by March 1, about $1 trillion worth of spending cuts will go into effect automatically. Ideally, Republicans don’t want the military spending cuts, and they have voted in the House to replace them with other cuts. But they can live with them if nothing happens. Coming off the fourth quarter in which the economy contracted by 0.1 percent and was hurt by defense cuts, Obama doesn’t want to have headlines of defense contractor layoffs eroding his political capital in the short window he has to advance his second term agenda.
His suggestion that Republicans agree to raise taxes again to delay the sequester is laughable — they have zero reason to do it. Either he agrees to spending cuts of an equal amount, or the sequester will kick in.