The savings from criminal justice reforms wouldn't fully finance the increased education investments needed, partly because states will likely spend much of the savings elsewhere. But reordering state priorities away from maintaining large prison populations and toward investing in human capital will pay off over the long term.
The sequester, and all the sequential sequesters over the next decade, deprive Democrats of the resources that they need to be, well, Democrats. Obama can proclaim big, bold initiatives as he did in the State of the Union Address, but they are all mere gestures -- because there is no money to spend on any of them, thanks to the bipartisan obsession with budget cutting. Even worse, Democrats end up colluding in eviscerating very popular and necessary signature programs like Medicare and Social Security, which literally define the core differences between the two parties. So by 2016, and even by 2014, nobody will much remember who was more at fault in the sequester battle of early 2013. The voters will be looking at their own economic situation, and it won't be pretty.