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Cancel the Sequester—or Virginia Gets It!

Congressional Republicans have done a pretty good job pretending not to care that the planned March 1 sequestration will cut $43 billion out of this year’s defense budget. Sure, it’s an “ugly and dangerous way” to cut spending, says House Speaker John Boehner. But, he says, “it is here to stay” if the alternative is a tax increase, as President Obama has proposed. Though the president has indicated he’d also be willing to cut spending, the speaker has offered no similar give: “The tax debate is now closed,” he says. No agreement to cancel the sequester will be acceptable if it includes a tax increase.

So much for Capitol Hill Republicans. GOP governors, on the other hand, have had much greater difficulty maintaining their composure about a prospective sequester. That’s because governors experience the economy in a way that members of Congress do not. If a state’s economy goes south, it’s the governor who tends to get blamed. And according to USA Today, the states hit hardest by planned Army sequester cuts “include Alabama, Texas, Virginia, and Pennsylvania,” while the states hit hardest by planned Navy sequester cuts would be California, Florida, and Virginia. All but one of those states has a Republican governor. And no Republican governor is hurting more right now than Virginia Gov. Bob McDonnell, who until three months ago was chairman of the Republican Governors Association, and remains on its executive committee. (McDonnell’s successor, Louisiana Gov. Bobby Jindal, has avoided weighing in on the sequestration fight, but in a January speech said, “We must not become the party of austerity, we must become the party of growth.”)

In cutting a total of $85 billion from this year’s federal budget, the sequester will deliver plenty of pain to Republican and Democratic constituencies alike. But half of that pain is allocated specifically to the Pentagon. That’s only fair, since the Pentagon accounts for more than half of all discretionary spending, to which the sequestration cuts are confined. But no sequestration cuts to other federal agencies even come close. We can argue about whether the Pentagon has $43 billion to spare—I think it probably does—but not about which state will suffer most from these defense cuts. That state is Virginia. And McDonnell is being anything but stoic.

Exhibit A is a letter McDonnell sent Obama on Feb. 18. It more or less begs Obama to cancel the sequester:

"The automatic sequestration reductions mandated by the Budget Control Act of 2011 are already having a significant adverse effect on the Commonwealth. When fully implemented, they could force Virginia and other states into a recession…. These reductions will have a potentially devastating impact in the Commonwealth, with the Northern Virginia and Hampton Roads regions at greatest risk."

Note that McDonnell departs from the conservative party line in bringing up the R word (“recession”). Republicans have in the past talked like “weaponized Keynesians,” Paul Krugman’s phrase for the belief that military spending, alone among all the different varieties of federal spending, can be justified on job-creation grounds.1 But they’ve abandoned that doctrine for the moment because if the GOP is going to get blamed for sequestration (as even Republicans seem to grasp they might), then the GOP will also have to get blamed for any economic hardship that results, up to and including a recession, which stands well within the realm of possibililty. If Republicans are going to favor sequester, then the correct conservative line on the economic impact of sequestration must be “no worries.” (Larry Kudlow goes so far as to call sequestration “pro-growth.”) McDonnell isn’t playing along.

McDonnell’s a very conservative politician, but no Virginia governor is in a position to pretend that government doesn’t create jobs. Citing a report by the Virginia Economic Development Partnership, McDonnell notes that six percent of all federal workers reside in Virginia, and that sequestration could lower the state’s economic output by 0.6 percent. Close to 10 percent of all jobs lost as a result of sequestration would be in Virginia. By one estimate, the state’s economy could end up suffering more than it did during the Great Recession.

In sum, the prospect of sequestration is cause for panic inside the Virginia governor’s mansion (and at a time when McDonnell is already getting hammered by Grover Norquist for his overhaul of state taxes). The Obama administration has taken astute notice, and has scheduled for this Tuesday a speech at a Navy shipbuilding yard in Newport News, where the sequester threatens to halt maintenance work on a Nimitz-class carrier named—could the symbolism get much better?—the USS Abraham Lincoln. Wuxtry, wuxtry! Party of Lincoln Mothballs Honest Abe! What’s that, Gov. McDonnell? You say, a deal including a tax increase would be all right with you? Could you say it a little louder so the crowd can hear?

All right, that last bit probably won’t happen. But if congressional Republicans are going to cave on sequestration, I predict it will come after Obama parades his hostage, Bob McDonnell, through the streets of Newport News.

  1. Krugman: "OK, so deficit spending hurts the economy — unless it’s spending on the military (or on the medical-industrial complex), in which case cutting spending destroys jobs."