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NPR Ballyhoos Sequester's 'Definite Minuses', Potential 'Bigger Negative Effects' on the Economy

The Wall Street Journal's David Wessel channeled the Obama administration's doom and gloom about the sequester on NPR's Morning Edition on Monday. Host Renee Montagne turned to Wessel to give a "reality check" on the sequester's current and future economic impact. The journalist cited how unnamed "economic forecasters...say they're worried that the effects of this spending restraint may have bigger negative effects" later this year.

Wessel harped on the "lots of little ways" the sequester has impacted people around the country, including the "bathroom in a national park where the toilets have been closed in some places" and how "the military is mowing grass less often at bases."

Montagne led the segment by noting that "it's been three months since the start of what we've come to know as sequestration – those across-the-board spending cuts that were triggered when Congress and the President failed to make a deal to reduce the deficit. At the time, the White House warned that the cuts would be devastating to the American economy; others argued not." She then asked her guest to "start with how are the spending cuts showing up around the country."

The newspaper editor replied with his list of "little ways...or not so little if you're the one whose paycheck is a little smaller". He admitted that at least one of his points came from the Obama administration.

DAVID WESSEL: Federal public defenders across the country, who are hardly under-worked, are facing furloughs of up to 20 days this year. The military is mowing grass less often at bases. One church in Hyattsville, Maryland says funding for its Meals on Wheels program for the elderly has been cut from $4,800 a year to $1,100 a year. And we know that fewer low-income Americans are going to get vouchers to pay for their rent – perhaps as many as 125,000 families, according to the White House.

Wessel continued that "you see the effects much more in communities that get a lot of federal money – Indian reservations, schools systems around military bases – and some of the effects won't show up for a long time."

The NPR host followed up by asking, "So, these cuts and whatnot – they feel really awful to the people who are experiencing them – but what about the larger economy?" Her guest answered, in part, by asserting that "these across-the-board spending cuts, and the payroll and income taxes that took effect at the beginning of this year, are definite minuses on the economy." He emphasized this point with a Commerce Department statistic.

When Wessel acknowledged that "despite the sequester and all this stuff in Washington, consumer confidence has now risen to the highest level in five years", Montagne inquired if "the economy is just going to manage to shrug this off". The Wall Street Journal editor replied by citing his anonymous "economic forecasters" predictions of "bigger negative effects" due to the sequester.

This segment from the public radio network picks up from where they left off from the time the sequester actually started. The April 5, 2013 edition of Morning Edition spotlighted "some ominous warnings" about the sequester, but failed to provide the source of them. It also comes just five days after NBC's Today show downplayed the economic impact of the sequester.

The full transcript of the David Wessel segment on Monday's Morning Edition:

RENEE MONTAGNE: It's been three months since the start of what we've come to know as sequestration – those across-the-board spending cuts that were triggered when Congress and the President failed to make a deal to reduce the deficit. At the time, the White House warned that the cuts would be devastating to the American economy; others argued not.

We thought it would be a good time to get a reality check from the Wall Street Journal's David Wessel for today's 'Business Bottom Line'. Good morning.

DAVID WESSEL, EDITOR, WALL STREET JOURNAL: Good morning, Renee.

MONTAGNE: Well, start with how are the spending cuts showing up around the country.

WESSEL: In lots of little ways, Renee – or not so little if you're the one whose paycheck is a little smaller, or you're try to go to a bathroom in a national park where the toilets have been closed in some places.

Federal public defenders across the country, who are hardly under-worked, are facing furloughs of up to 20 days this year. The military is mowing grass less often at bases. One church in Hyattsville, Maryland says funding for its Meals on Wheels program for the elderly has been cut from $4,800 a year to $1,100 a year. And we know that fewer low-income Americans are going to get vouchers to pay for their rent – perhaps as many as 125,000 families, according to the White House.

You see the effects much more in communities that get a lot of federal money – Indian reservations, schools systems around military bases – and some of the effects won't show up for a long time. The National Institutes of Health, for instance, is making fewer grants. That might mean fewer cures down the road, but not much you can see now.

MONTAGNE: So, these cuts and whatnot – they feel really awful to the people who are experiencing them – but what about the larger economy?

WESSEL: Well, the spending cuts of the sequester – these across-the-board spending cuts – and the payroll and income taxes that took effect at the beginning of this year, are definite minuses on the economy. If you look at what the Commerce Department told us about the first quarter, the economy grew at a 2.4 percent annual rate, but only because the private sector overwhelmed the cutbacks in federal purchases. They actually subtracted seven-tenths of a percent from growth.

Consumer spending, though, has held up surprisingly well. Apparently, this is the benefit of – both economic and psychologically – of higher stock prices and higher housing prices, which are making people feel richer and allowing them to keep spending, even though there's these negatives and their wages aren't going up. I mean, despite the sequester and all this stuff in Washington, consumer confidence has now risen to the highest level in five years.

MONTAGNE: And David, does that mean that despite all the hand-wringing – what, the economy is just going to manage to shrug this off?

WESSEL: I don't think so. I mean, some federal agencies had left vacancies unfilled in anticipation of the sequester. Some have found little pockets of money to offset the effects in the near-term. Others had money in the pipeline, but that's drying up. So, if you talk to economic forecasters – or, indeed, some officials at the Federal Reserve – they say they're worried that the effects of this spending restraint may have bigger negative effects in the second quarter of this year and the third quarter of this year. And, of course, without something coming out of Congress and the President, these spending cuts will persist into the fiscal year that begins October 1, and that's really worrying the Pentagon.

MONTAGNE: Of course, the aim of the sequester was to push Congress and the President to come up with an alternative way to reduce the deficit, which didn't happen. But what has happened to that idea?

WESSEL: Well, it's a good question, Renee. Basically, the momentum to deal with the long-term deficit has evaporated. The near-term deficit is coming down. The pace of health care cost increases is slowing. The climate for bipartisan compromise certainly hasn't improved in the past few weeks. The economy seems to be doing a little better. And the financial markets are preoccupied with all sorts of other things. So, there's very little pressure on Washington to deal with the long-term deficit problems – Social Security, health care costs – that still remain, but they've kind of lost interest.

MONTAGNE: David Wessel, economics editor of the Wall Street Journal, thanks very much.

— Matthew Balan is a news analyst at the Media Research Center. You can follow him on Twitter here.