Will the Sequester Hurt Democrats More Than Republicans?

Yes, the sequester is coming.  Yes, it was the president’s idea.  Many thought, myself included, that Democrats wanted to go off the fiscal cliff since liberals would get their tax increases, they’ll get their defense cuts, and they’ll finally turn the page on the Bush Tax Cuts.  Hence, Democrats had no reason to come the the negotiating table to avert financial catastrophe.  However, a (BAD) deal was hashed out, and, ironically, 84% of the Bush Tax Cuts became permanent.  It’s a policy shift that got Debbie Wasserman Shultz a little confused back in January.

However, according to Joshua Green of Bloomberg Businessweek, the sequester will hurt Democratic congressional districts more than Republican ones, and could cost up to 700,000 jobs.

…a new study out [last] Thursday morning from Bloomberg Government (subscription only) does quite a bit to upend that logic. The study shows that Democratic congressional districts will be harder hit by the military cuts than Republican ones, and that eight of the top 10 districts that will experience the deepest cuts are represented by Democrats. Robert Levinson, the Bloomberg Government defense analyst who conducted the study, found that “Democrats won 47 percent of the seats in the House of Representatives in the 2012 election, but 58 percent of the military’s fiscal 2012 prime contract spending went to companies performing work in those districts.” Among the top districts, military spending in those represented by Democrats averaged $893 million this year, vs. $573 million in those represented by Republicans.

Additionally, Steve Goldstein posted on MarketWatch on February 19:

…. if the scheduled budget cuts called the sequester were to go into effect…macroeconomic Advisers says the result would be 700,000 job losses by the end of 2014. That would push the unemployment rate by a quarter-point, though the forecasting firm still sees the jobless rate shrinking to 7.4% by that point, from 7.9% currently.

“The macroeconomic impact of the sequestration is not catastrophic.  Nevertheless, the indiscriminate fiscal restraint would come on the heels of tax increases in the first  quarter that total nearly $200 billion, with the economy still struggling to overcome the legacy of the Great Recession, and when the FOMC is constrained in its ability to
offset the additional fiscal drag with a more accommodative monetary policy,” the firm says.

The sequester would actually help 2014 growth (by a slender 0.1%), the firm reckons, because it would push the Federal Reserve to keep rates lower for longer.

Republicans have another angle to exploit in depicting this president – and his party – as bad for the economic health of the nation.  It also shows that Obama really doesn’t care if he screws his own party with this issue, or on firearms, which has many Democrats – in red states – balking at the idea of more regulations that chip away at the Second Amendment.