Sequestration-Day One

The sequestration is here.  It's going to be painful and yes, as Obama says it is a stupid way to do things.  But it better than any alternative we are likely to get?  Matt Yglesias thinks it is.

But on the merits it seems to me that while sequestration is hardly optimal budget policy, it really isn't all that bad in the scheme of things, and really going through with it would be better than repealing it. The key reason is that fully half the cuts are cuts to "defense" spending, and yet nobody from either party is seriously trying to maintain that America will be left defenseless in the wake of this reduced military spending. The specific sequestration mechanism is clearly awkward and clumsy, but again nobody's saying the Mexican army is going to come swarming over the border to reconquer Santa Fe, that the Taliban is now going to be able to outspend the Pentagon, or that America's NATO allies are now left unable to fend off a Russian invasion. That's half the cuts with basically zeroreal public policy harm.
So then you look at the domestic side. Your basic transfer payments to poor people are spared, your transfer payments to the elderly are basically spared, and then everything else gets cut willy-nilly. That leads to some real policy harms. Valuable research grants are going to not happen. We'll see some real bottlenecks at regulatory agencies. But obviously there's some waste and fat in this domestic discretionary spending.

I think this is about right. I applaud the defense cuts but realize the domestic cuts will be painful but any replacement plan is likely to include cuts to Social Security and Medicare.

As originally designed in 2011, the deficit-reduction sequester splits cuts between defense and domestic spending, and explicitly exempted programs like Social Security and Medicaid. But no one in Washington believes the sequester cuts will be permanent, and liberals worry the deal Congress eventually reaches to replace it will slash funding to those programs — as Republicans and some Democrats have advocated.
"There's a broader concern about the fact that entitlements may get ensnared when we go to an alternative fix, [that] they won't escape," Rep. Jerry Nadler, a progressive Democrat from New York, told BuzzFeed. "I have heard that concern."
"Not only do we have the sequester, but we have to be thinking about the deal that replaces it as well," said Melissa Boteach, a director at the Center for American Progress. "Republicans have already begin to push hard for benefit cuts."

 With sequestration a realty Yglesias wonders why Obama struck a deal in January to avoid going over the fiscal cliff.

Now imagine an alternate universe in which everyone woke up on January 3 to discover sequestration in effect and the Bush tax cuts fully expired. Republicans would have wanted a giant tax cut, and a big increase in defense spending. Obama would have wanted a smaller-but-still-large tax cut, a smaller increase in defense spending, and a substantial increase in non-military spending. It seems like cutting a deal to cut taxes and increase both military and non-military spending could have been struck relatively easily. Yes, the country would have suffered from a week or two or maybe even five of excessive fiscal drag. But with everyone agreeing that taxes are too high and military spending too low, working something out where we raise non-military spending a bit more than Republicans want and in exchange cut taxes a bit more than Democrats want doesn't seem too hard.