The sequester, which brings automatic, across-the-board spending cuts, officially went into effect last Friday. Furloughs are on the horizon for federal workers in Washington and The Takeaway has discussed the sequester's potential impact on scientific research, education, toxic waste clean up and even the price of meat.
Lawrence White, a professor of economics at New York University's Stern School of Business, explains how sequestration will impact the economy, particularly unemployment and the markets. White worked in Washington in the late 1970s, and he compares the problems facing President Obama and the 113th Congress to President Carter's era.
He says of the sequester policy: "Not good policy. Dumb. It’s nuts," but, he contends, "it's not cataclysmic." White admits that because the economy is still weak, this is not a good time for sharp cuts in spending, but the result will not break the economy as Washington has lead us to believe. "The markets…whatever effect there is going to be, they’ve long ago anticipated it. So the fact that there isn’t any immediate reaction is not surprising," he says.
"There just doesn’t seem to be that ability to work across the aisle," says White, pointing to the compromise reached after New Years as an example. In that instance, Republicans agreed to modest tax increases on the very wealthy only to have Democrats respond with what he calls "sniping."
According to White, "The pattern is one of 'gotcha' and 'sniping,' not of 'reach across the aisle and try to move together.'"