(CBSNews.com) - It's March 1, and President Obama today will have to set in motion the sequester cuts that will slash $85 billion from the budget this fiscal year and $1.1 trillion more over the next 10. Lawmakers this week have been busy arguing over who came up with this lousy policy, but the better question is why.
The sequester was designed to compel Congress to cut the deficit and work towards stabilizing the national debt. The sequester itself will accomplish that, of course. It also, however, will take a toll on the economy while failing to address the long-term drivers of the debt. As President Obama has suggested in recent days, Washington seems to have lost sight of its "North Star": creating jobs and a strong economy.
"Our top priority must be to do everything we can to grow the economy and create good, middle-class jobs. That's our top priority. That's our North Star," the president said at the White House last month. "That drives every decision we make. And it has to drive every decision that Congress and everybody in Washington makes over the next several years."
When lost, it can be helpful to pause and retrace one's steps. So for the sake of explaining why Congress is going through with a policy it can't stand, here's a look back at what brought it to this point and where lawmakers can go from here.
Is $1.2 trillion the right level of deficit reduction?
The sequester had its origins in Washington's 2011 budget agreement, which cut $1 trillion in spending immediately and called for at least $1.2 trillion more in budget savings. Congress agreed that if a congressional "supercommittee" couldn't come up with an acceptable deficit reduction plan by late 2011, they would just slash that $1.2 trillion from the budget over 10 years, starting in 2013.
Washington was looking for at least $2.2 trillion in budget savings so that Republicans would agree to raise the debt limit -- the nation's technical borrowing authority -- by about the same amount. Failing to raise the debt limit would have been an economic disaster, leaving open the threat that the U.S. government could default on its loans.
The budget deal, Mr. Obama said on July 31, 2011, "will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months."
So now Congress is taking a "meat axe," as lawmakers have said, to $1.2 trillion of the budget. But as it turns out, achieving $1.2 trillion in budget savings over 10 years is a pretty good goal, according to some economists.
Research from the center-left Center for Budget and Policy Priorities shows that Washington could stabilize its debt-to-GDP ratio by cutting $1.5 trillion -- in other words, it would stop the national debt from growing faster than the underlying economy. Jared Bernstein, who from 2009 to 2011 served as Vice President Joe Biden's chief economist, told CBSNews.com it's "the first goal of fiscal responsibility."
The debt ratio grew because of the recession, Bernstein said, but "now that things are slowly improving, we need to plot a course to stabilization. That's the argument for an additional $1.5 trillion [in savings] over the next decade."
Other economists like Douglas Holtz-Eakin, former director of the Congressional Budget Office and former chief economic policy adviser to John McCain's 2008 presidential campaign, say it's not enough to stabilize the debt. Holtz-Eakin has told Congress it needs to work towards reducing the debt as a share of GDP. That said, Holtz-Eakin said he's skeptical the sequester, if left in place, will even result in $1.2 trillion in cuts.
"We haven't cut anything yet," he told CBSNews.com. "Those discretionary spending caps are nothing but promises by Congress. I take that with a big grain of salt -- and even if they were to do that, that's the wrong part of the budget to cut."
What's the point of cutting discretionary spending?
Both Holtz-Eakin and Bernstein agree that the sequester is cutting from the wrong part of the budget. Half of the cuts hit discretionary domestic spending and half hit defense spending. The real budgetary pressures, however, are coming from mandatory spending like Medicare.
"If we don't slow the growth of health care costs, we've got an unsustainable budget path regardless of how we whack away at air traffic controllers next week," Bernstein said. "There's a pretty substantial disconnect there."
So what was the point of creating a policy that cut strictly from discretionary spending?
"It's a bad idea because it was intended to be a bad idea," Holtz-Eakin said of the sequester, which was supposed to serve as motivation for the "supercommittee" to come up with something better.
The sequester, he said, "is a way of cutting that's very mechanical, that doesn't distinguish between better or worse cuts... For a whole variety of reasons, it's not the way you would reduce federal spending."
Holtz-Eakin, like most congressional Republicans, says that ideally, this year's $85 billion in sequester cuts would be replaced with more "sensible" cuts. But if lawmakers can't agree to that, then he thinks they might as well let the sequester happen.
The Congressional Budget Office projects the sequester will cost the economyaround 750,000 jobs this year and slow GDP growth by 0.6 percent. Still, Holtz-Eakin argues Congress can't abandon its first attempt to get the deficit and debt under control.
Bernstein, meanwhile, agrees with Democrats that the sequester should be replaced with a "balanced plan" split between revenue increases and spending cuts. Otherwise, lawmakers should scrap it all together, he said. He points out that the deficit has, in fact, fallen by half since 2009.
"The spending on parts of the budget we can control through annual appropriations are going down pretty sharply," he said. "If we start slashing and burning programs that invest in the future, it's not going to help."
Where to go from here?
That disagreement, of course, is what brought Washington to this point. Getting past this point likely starts by changing the conversation.
"People realize our immediate problem isn't the budget deficit, it's the jobs deficit -- and policymakers don't' get that, but people do," Bernstein said. A CBS News poll from last month shows that four in 10 Americans think jobs and the economy is the nation's most pressing problem, while 11 percent say it's the deficit and debt.
At the same time, people have a skewed understanding of the nation's budgetary pressures. In a recent Bloomberg News poll, a third of respondents thought education accounts for 20 percent of the budget (it accounts for 2 percent), while 40 percent of respondents thought social safety net programs like food stamps account for 20 percent (they make up 13 percent of the budget).
"I think there's an enormous amount of misunderstanding about the size of the problem, where it comes from," Holtz-Eakin said.