House Budget Committee Chairman Paul Ryan’s newly released budget poses an identical strategic challenge to the President as last year.  I recommend you watch the President carefully this week to see whether and how he responds.

This is the third in a three part post.

  1. President Obama’s proposed medium-term deficits
  2. The Ryan budget proposes lower deficits, less debt than the Obama budget.
  3. (this post)

I’ll begin with the conclusion from the second post.

Conclusion: Over each year of the next decade the Ryan budget would result in lower deficits, less debt, and a better long-term debt trend than the President’s budget.

Key strategic point:  Last year President Obama’s fiscal strategy was to claim to match Republicans on deficit and debt reduction, then point out that he did so in a way that he claimed better fit the priorities of most Americans.  The difference, the President wanted to claim, was not in deficits or debt, but in how he and the Republicans reached the same end goal.  His budget, the President argued, was both fiscally responsible and more compassionate because he raised taxes rather than cut spending deeply.

Rewind one year

Early last February the President proposed a budget.  About two months later Chairman Ryan proposed a budget that would have resulted in significantly lower deficits and less debt than the President’s proposal.  This undermined the President’s public strategy, so a week later the President counter-offered.  He released a new budget proposal that he claimed matched the Ryan budget on deficits and debt.

While the President did put more spending cuts and tax increases on the table in his second proposal, he did not actually match the deficits in the Ryan budget.  He couldn’t or wouldn’t make enough hard choices so he (a) relied on an ambiguously defined automatic trigger to justify some of his deficit reduction claims and (b) used a longer timeframe to measure his proposal than Ryan’s.  The Ryan budget proposed $4 trillion of deficit reduction over 10 years. The President said his new proposal reached the same $4 trillion in 12 years, hoping that no one would notice that this meant he was proposing $2.8 trillion of deficit cuts over 10 years (and even that number is a generous interpretation). By showing you results rather than changes from a baseline I hope that my graphs will make a repeat of any such tricks more transparent this year.

Setting aside the holes and timing gimmicks in the President’s second budget proposal last year, the strategic move stands. When it became obvious that the House Republican budget would result in significantly lower deficits and less debt than the President’s budget, President Obama proposed a second budget.

All this happened well before the grand bargain negotiations with Speaker Boehner, the debt limit showdown that resulted in the Budget Control Act, and the failed Super Committee negotiations.  The challenge the President faces today is identical to the one he faced a year ago, but there has been a lot of intervening action that might provoke a new Presidential strategy this year.

Same challenge. Same solution?

Today President Obama faces the same strategic challenge he did last year at this time.  The President has two options.

<

ul>

  • Stick with his February budget proposal and take the lumps for proposing higher deficits and more debt than House Republicans.  Counterattack by characterizing Chairman Ryan’s spending cuts as severe.
  • As he did last year, publicly modify his February budget proposal to
    [claim to] match Chairman Ryan’s deficits and debt but with more tax increases and fewer spending cuts.

    • The President and his team are smart enough that they should have seen this coming.  I wonder how they will answer the deficit/debt comparison question today?  Has the President made this strategic choice yet?