The President’s budget strategy

The President’s budget strategy

Yesterday I analyzed the substance of the President’s new budget proposal.

More important than the substance of his proposal, though, was his aggressive attack on the Ryan budget and those proposing it.

Jake Tapper captured it perfectly by comparing two quotes from President Obama.

At the House Republican retreat in January, 2010:

THE PRESIDENT: We’re not going to be able to do anything about any of these entitlements if what we do is characterize whatever proposals are put out there as, “Well, you know, that’s — the other party’s being irresponsible. The other party is trying to hurt our senior citizens. That the other party is doing X, Y, Z.”

Yesterday:

THE PRESIDENT: One vision has been championed by Republicans in the House of Representatives and embraced by several of their party’s presidential candidates…This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit.  And who are those 50 million Americans?  Many are someone’s grandparents who wouldn’t be able afford nursing home care without Medicaid.  Many are poor children.  Some are middle-class families who have children with autism or Down’s syndrome.  Some are kids with disabilities so severe that they require 24-hour care.  These are the Americans we’d be telling to fend for themselves.

The news of yesterday’s speech was the strategic direction the President revealed through these attacks, not the substance (what little there was) of his proposal.

Between now and Election Day I think the President wants:

  1. a small deficit accomplishment to rebuild credibility with independents;
  2. a vigorous and political tax fight; and
  3. the political benefits of scaring senior citizens.

The President made his budget strategy clear.

  • Try for a small short-term bipartisan deficit reduction deal this year – tweaks to Medicare, Medicaid, and other entitlements, maybe combined with some defense cuts. Save maybe $100 – $400 B over 10 years, roughly an entitlement parallel to the recent appropriations deal. Use the new VP-led negotiating process to steer those negotiations. See if you can split off a few Senate Republicans from the pack.
  • Push for tax increases as part of this short-term deal, but abandon them as needed to get to a deficit reduction signing ceremony.
  • Get a signing ceremony for this bill to demonstrate the President can work with “reasonable Republicans.” The photo op of the President signing a bill with Republicans standing next to him is critical for the 2012 campaign. Frame the bill as a demonstration of good faith and a first step toward a long-term solution.
  • Use the photo, combined with claimed but unsubstantiated deficit reduction from yesterday’s speech, to build credibility with independents for November 2012.
  • Blast away at Republicans on the big spending issues. Take long-term entitlement reform off the table, reassuring his base. Demagogue on Social Security, Medicare, and Medicaid.
  • Pick a fight over the top tax rates, exciting your political base. Try to restore the Clinton 90s framing of “Medicare and Medicaid vs. tax cuts for the rich.”

The President’s new strategy guarantees two more years of fiscal stalemate and poisons the well on the most important economic policy question facing American policymakers: how to permanently solve the long-term fiscal problem caused by the unsustainable growth of Social Security, Medicare, and Medicaid.

(photo credit: Matt Brubeck)

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