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Wednesday, February 16, 2011

Can the White House tackle the deficit?


When it comes to the budget, no two people in town know more than Bob Greenstein, director of the Center on Budget and Policy Priorities, and Maya MacGuineas, president of the Committee for a Responsible Federal Budget. And yet, Monday, they disagreed. "Does not go nearly far enough," MacGuineas said of President Obama's budget. "An important step toward addressing the nation’s long-term fiscal challenge," Greenstein concluded.

But perhaps they're more in sync than they know. I spoke with both today, and they agreed on quite a bit: That this budget, on its own, does not come near to solving our fiscal problems; that more needs to be done, and we're better off doing it sooner than later; that the real question is what happens in the coming negotiations, not what was written into the budget. "What we don't know," MacGuineas says, "is what's happening behind the scenes."

The Obama administration's theory of policymaking amid divided government is a frustrating one. What most people want from the president is to lead. And leading, in this case, means giving a speech, getting behind some unpopular ideas, trying to change public opinion. It means acting like Jed Bartlet in the final five minutes of an episode of "The West Wing." "What are the next 10 words in your budget?" Obama is supposed to ask the Republicans after delivering his bout of tough fiscal medicine. "Your taxes are too high? So are mine. Give me the next 10 words. How are we going to do it? Give me 10 after that, I'll drop out of the race right now."

But the White House has come to the conclusion that that type of leadership doesn't work. It believes that the quickest way to kill a controversial proposal in a polarized political system is to have the president endorse it. Once a high-profile proposal is associated with the White House, Republicans (correctly) view its passage as a threat to their political fortunes. That's why the Obama administration didn't endorse a payroll tax holiday until after the election, when it emerged as part of the tax deal. Endorsing it before the election would've "poisoned the well," one administration official told me after. Republicans would have had to attack it, and that would have made it impossible for them to endorse it later.

Greenstein sees a similar theory at work in the budget. "I don't think Obama could’ve been clearer that he wants a bipartisan commission on Social Security like they had in the early '80s," he says. "But if you look at what came out of that commission, if those items had been in Reagan's budget the previous February, they would've been dead in 30 days."

Obama echoed this argument at his news conference Tuesday. "If you look at the history of how these deals get done," he said, "typically it’s not because there’s an Obama plan out there; it’s because Democrats and Republicans are both committed to tackling this issue in a serious way."

And are Democrats and Republicans committed to tackling this issues in a serious way? I guess we'll find out. "We're going to be in discussions over the next several months," Obama continued. "This is going to be a negotiation process."

The most serious work being done is in the Senate, where Mark Warner (D-Va.), Saxby Chambliss (R-Ga.), Dick Durbin (D-Ill.), Mike Crapo (R-Idaho), Kent Conrad (D-N.D.) and Tom Coburn (R-Okla.) are meeting regularly to create legislation based off the Fiscal Commission's final report. In theory, that's the sort of project Obama is looking for: a negotiation between sitting senators of both parties. I asked Warner about this today. Should the White House have put its shoulder behind his process? "We're not at the point where the president should get involved yet," he replied.

Wonks -- myself included -- have a preference for the bold plan, the single solution, the sweeping stroke. Slow and incremental just isn't how people who care about policy tend to think. They want to solve problems, not make a bit of progress on them. And from that perspective, the budget was a huge disappointment. That's particularly true when compared to the Fiscal Commission's report, which took on the military, entitlements and tax expenditures. Love it or hate it, it was, at the least, ambitious. And policy types like ambitious.

But policy types don't tend to get much done. And although this administration has been enormously frustrating, what with its preference to let Congress take the lead, to draw few lines in the sand and to let the process play itself out, it's gotten a lot done. Much more than its critics would've expected at the beginning of any particular policy campaign the White House has kicked off. "Let’s face it," Obama said at his news conference Tuesday, "you guys are pretty impatient. If something doesn’t happen today, then the assumption is it’s just not going to happen. Right? I’ve had this conversation for that last two years about every single issue that we worked on, whether it was health care or 'don't ask, don't tell.' "

Obama's confident recitation of his record doesn't mean he will get this done, too. But I wouldn't be too quick to bet against his administration just because the Simpson-Bowles plan wasn't dropped into his budget. I'd look, rather, at two other things: Is a "grand bargain" on the deficit something he wants, and is it something he can get?

On the first question, I think the answer is yes. In Bruce Reed, Gene Sperling, Jack Lew and Bill Daley, the White House has just brought in or promoted a number of Clinton-era officials notable for their concern with, and success pursuing, deficits. And on a more coldly pragmatic level, if the administration gets something everyone agrees to call "deficit reduction" done, and the economy is recovering, then barring some sort of mishandled foreign policy crisis, whoever the Republican's nominate for president will be starved for issues. Obama becomes, if not a lock for reelection, then closer to it.

As for the second question, well, that's harder. The new class of House Republicans doesn't seem particularly friendly to compromise. And the same political calculus that makes a deficit-reduction bill a political no-brainer for Obama makes it a disaster for the Republicans in 2012. Remember Senate Minority Leader Mitch McConnell's warning that "the single most important thing we want to achieve is for President Obama to be a one-term president." But with the notable exception of cap-and-trade, this White House has been pretty good at confounding critics of its legislative strategy.
 

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