The enemy within

“HOW can Congress go on a recess with the country in the shape it’s in?” asks a constituent of Bobby Scott, a Democratic congressman for the Hampton Roads region of Virginia, to applause and cries of “Amen!” The angry voter is referring to the “sequester”, an unpopular slate of cuts to the federal budget due to take effect on March 1st unless Congress intervenes. The cuts, as Mr Scott explains, were intended to be so painful that lawmakers would feel obliged to come up with some sort of substitute. But Congress’s current break ends just four days before the deadline, with no alternative in sight.

When Congress first adopted the sequester, in August 2011, the intention was to spur a deal to reduce the deficit. Hence the big and indiscriminate cuts it threatened if no deal were reached, of $1.1 trillion over the next decade, including $85 billion this year, to be divided equally between the military and civilian portions of the budget. The biggest items in the budget—Social Security (the federal pension scheme), Medicaid (government-funded health care for the poor) and, for the most part, Medicare (the federal health-care scheme for the old)—are exempted, as are military pay and services for veterans. So the remaining elements of the defence budget must shrink by a whopping 8% this year, and non-military programmes by about 5%.

Just across the James river from Mr Scott’s meeting with constituents, at the Norfolk Naval Station, the navy’s biggest base, the effects of the sequester are already being felt. The Harry S. Truman, an aircraft-carrier, was supposed to be well on its way to the Persian Gulf by now. Instead, it is moored to a pier. The navy cancelled its sailing in early February in anticipation of a sparser deployment schedule if the sequester kicked in. Near it sits another idle carrier, the Abraham Lincoln, which was due to start a big refurbishment this month. That, too, has been delayed thanks to the sequester and an earlier round of budget cuts, which together will require huge cuts in maintenance.

There is much more of that sort of thing to come. The Pentagon has said it will have to put most of its 800,000 civilian employees on leave without pay, cut back training and curtail medical benefits for soldiers’ families. Civilian cuts will disrupt everything from inspections of meat-packing plants to subsidised child-care for the poor. Barack Obama, sounding the alarm this week, gave a long list of consequences: “Federal prosecutors will have to close cases and let criminals go. Air-traffic controllers and airport security will see cutbacks, which means more delays at airports across the country. Thousands of teachers and educators will be laid off.”

The effects of all this on the economy of Hampton Roads will be grim, says Vinod Agarwal, a professor of economics at Old Dominion University. Half the local economy is tied to military spending. What helped buoy the region through the recession now looks likely to pull it under. Mr Agarwal predicts that local output will fall by over 3% this year, and some 30,000 jobs will be lost, if the sequester goes ahead. This week the local division of BAE Systems, a defence contractor, gave a formal 60-day notice of a possible 1,600 lay-offs.

For Virginia as a whole, the consequences will be equally grim. Bob McDonnell, the governor, fears the sequester could pitch the state into recession. A study last year by a local university predicted that some 165,000 jobs would be lost over two years—almost 5% of the state’s total. Around the country as a whole, guesses the Congressional Budget Office, as many as 1.4m jobs would disappear.

No time to make a deal

Little wonder, then, that Mr Obama has spent the past few days fulminating about the failure of Congress to call off the looming disaster. He is still willing, he insists, to strike a deal that would replace the sequester with cost-cutting reforms to Medicare and an overhaul of the tax code that would raise revenue by eliminating deductions and loopholes. It will be difficult to thrash out such a deal in the next week, he concedes. Instead, he proposes that Congress find just enough deficit-reduction measures to substitute for the required cuts for the next month or two, to allow more time for negotiation.

Both chambers are in recess until February 25th, however. Even then the Speaker of the House of Representatives, John Boehner, says it is up to the Senate to come up with a solution, since it ignored the two proposals the House sent its way in the last Congress. The Senate is due to vote on two alternatives of its own on its return. But Republicans say they cannot accept any plan that involves tax increases, while the Democrats argue that relying exclusively on cuts would place an unfair burden on the poor and the elderly. Ominously, Mitch McConnell, the leader of the Republican Senate minority and author of several recent last-ditch fiscal deals, says “I’m not interested in an 11th-hour negotiation.”

In part, this complacency stems from the knowledge that the next month will be spent haggling over the budget anyway, since the law allowing the government to spend any non-entitlement money at all expires on March 27th. Many observers assume that Congress, with its penchant for fiscal melodrama, will let the sequester go into effect for three weeks and then undo it for the rest of the fiscal year, at least, as part of a bigger agreement on spending over the next six months.

There are plenty of Republicans, however, who argue that allowing the sequester to go ahead would be no bad thing. At least, the theory runs, that would ensure substantial spending cuts without the need to concede any more tax increases beyond the $620 billion hike they grudgingly allowed in January. Whether they stick to this stance will depend on how much howling the sequester generates. Tellingly, right-wing think-tanks are pooh-poohing the impacts of the cuts, while left-wing ones are playing them up. Republicans in Virginia, however, are already making a stink. Mr McDonnell has sent Mr Obama a letter urging him to do more to avert the cuts. Scott Rigell, a Republican congressman from Hampton Roads, goes further: unlike most of his colleagues, he says he is willing to accept a money-raising overhaul of the tax code as part of a deal.