The outcome of the sequester ultimatum appears to have taken everyone by surprise. Two long summers ago, when the president and House speaker John Boehner conjured a prospect so terrible that even spending on defense would be deeply cut, they both assumed Congress would buckle rather than approve such a blow to the nation’s pride. According to Bob Woodward’s The Price of Politics, Boehner said, “Guys, this would be devastating to Defense. This is never going to happen.”
But neither man appears to have taken account of the clearly stated views of the Tea Party. There are few better ways of appreciating how the Republican Party has transformed in the last two years from a party of defense hawks to a party of deficit hawks than tracking how the sequester has turned from a threat to the nation’s defenses to an unparalleled opportunity to bring the government to heel.
If Obama and Boehner had taken heed of the strident voices offstage, they might have guessed their ostensibly idle threat to the Pentagon would be taken as a chance to reduce the size of the federal government. They didn’t, and the sequester is upon us, promising, according to the Central Budget Office and IMF, to throw 750,000 out of work and slow down already anemic economic growth by 0.6 points. No surprise there: If you take money out of an economy, activity flags and the economy shrinks.
What is surprising about the Tea Party calling the sequester bluff is not so much that fiscal conservatives are doing just what they said they would – one thing about a short, simple, absolutist dogma is that the slightest departure from the true creed is readily observable – as the quiet emanating from the defense industry, the defense hawks in Congress, the defense unions and the defense lobbyists. The whole panoply of vested interests surrounding defense that has ensured that federal spending on guarding our shores and keeping tyranny at bay has, since Eisenhower, become the main Keynesian engine of economic growth. Does the hushed response to this most profound assault upon defense spending mean the end of Keynesian militarism?
Keynes, long dead before American defense hawks adopted him as their patron saint, offered few views on whether spending on war was an appropriate use of his remedies for boosting economic activity. He had jokingly advocated absurd and wasteful ways of spending public money to increase demand, including filling bottles with bank notes, burying them in a hole, then paying others to dig them up. But as someone who helped the British Cabinet run the ruinous and murderous World War One, Keynes knew that spending on war was hardly as beneficial to society as building new roads and homes. But in the midst of a collapse in aggregate demand, any large-scale spending, including on war materiel, is welcome. In 1939, as Congress was granting Franklin Roosevelt billions to arm America for war against the Axis dictators, Keynes wrote, “If expenditure on armaments really does cure unemployment, a grand experiment has begun. We may learn a trick or two which will come in useful when the day of peace comes.”