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April 9, 2011
Budget Deal: Was Obama’s Hand
Worse than Boehner’s?
The president faced a Hobson’s choice of pain now or pain later. He can only hope the deal he embraced does not derail the recovery.
By Jill Lawrence
There’s no denying that House Speaker John Boehner was dealt a difficult hand in the budget struggle and that he played it well. He helped avert a government shutdown, he avoided (at least for now) an uprising by tea party conservatives, and he won two-thirds of the spending cuts his party had sought.
But the worse hand may well have been held by President Obama and congressional Democrats. As details of the $38.5 billion in budget cuts emerge, they can expect howls of protest from the affected constituencies. They may see falling poll numbers as Americans double down on their tendency to support cuts in the abstract and oppose them when they hit home. Worst of all, the economic recovery could be at risk.
And, of course, this agreement — described as very hard work by both sides — is just the run-up to titanic battles over the 2012 budget and beyond, with shutdowns looming at every juncture.
Boehner framed the agreement for the remaining months of 2011 as a booster shot for the economy. “It really will in fact help create a better environment for job creators in our country,” he said. Yet that’s not the view of liberal economists, Wall Street analysts and even the multiple bipartisan commissions formed to address the threats of soaring deficits and debt. They all say shrinking government spending in 2011 could derail a fragile recovery.
Any hint of a slowdown is a huge drag on Obama’s re-election chances. So why has he fully embraced this agreement as “a budget that invests in our future while making the largest annual spending cut in our history”? Talk about a dilemma. Door one: Spending cuts that experts say could hobble the recovery. Door two: A shutdown that puts 800,000 federal employees out of work and ripples through the economy. Bottom line: The spending cuts are inevitable in the long run, given the nation’s fiscal predicament, and would do less short-term damage to the economy than a shutdown.
Avoiding a shutdown was also imperative for Obama from a political standpoint. He may not have much real control over House Republicans, but he is theoretically in charge and can’t afford to preside over a mess. Even more practically, there is the question of independent voters, who will decide the 2012 election. They are almost as worried about federal spending as Republicans who rate it their number-one worry, according to a Gallup analysis this month. And, as Gallup and other pollsters have found, independents much prefer compromise to holding out for a partisan position.
Democrats remain mindful of the potential for their base to revolt. Jon Summers, a spokesman for Senate Majority Leader Harry Reid, tweeted Saturday to alert the world to “3 key Dem bdgt wins.” He cited protecting “women’s health” (that is, preserving funds for Planned Parenthood), cutting $3 billion in Pentagon “waste” at the recommendation of Defense Secretary Robert Gates, and cutting $17 billion in “mandatory” programs such as agriculture subsidies, which Summers said staved off “severe cuts” to other key programs.
Later Summers cited CNN reporting that funding for the Corporation for Public Broadcasting — another GOP target — remains intact. The GOP had earlier dropped its demand to limit the pollution control powers of the Environmental Protection Agency.
Most of those “wins,” however, simply preserve the status quo. And while the GOP did not zero out some of its favorite targets, those demands were useful as bargaining chips with which to extract more spending concessions.
The Planned Parenthood saga in particular presented Democrats with a political opportunity that they seized with uncharacteristic discipline and effectiveness. Republicans framed that demand as a principled stand against abortion, on the grounds that the federal money the group cannot use for abortions frees up other money for abortions. Democrats argued that the GOP was attacking “women’s health” — that is, the cancer screenings, contraceptive prescriptions and other health services that Planned Parenthood says constitute 97 percent of its work.
So yes, Democrats maneuvered successfully on the public relations front, but it was a brief win on a minor battlefield involving a tiny fraction of the federal budget. Next month the United States is expected to reach the current $14.3 trillion limit on borrowing money and Congress will be asked to raise the debt ceiling. Sen. Kay Bailey Hutchison, R-Texas, told CNN that “the debt ceiling is going to be Armageddon.”
That’s because Republicans plan to hold out for trillions in savings, not billions, before agreeing to raise the debt limit. And their blueprint is Rep. Paul Ryan’s proposed 2012 budget, which ends Medicare and Medicaid in their current forms and repeals the new health law that is Obama’s capstone achievement.
What’s missing in Ryan’s plan and in the agreement just reached on Capitol Hill is any suggestion that the government should raise taxes, close tax loopholes or end tax subsidies — in fact, Ryan would cut taxes for wealthy people. All the debt commissions say solutions should include a combination of spending cuts and “revenue enhancements” — that is, tax increases.
Several polls have found that the public supports higher taxes as part of a solution to the debt crisis. Some Republicans, notably Oklahoma Sen. Tom Coburn and Indiana Gov. Mitch Daniels, have suggested that may be necessary. And yet it’s completely possible that support for tax hikes, even on the wealthy or oil companies, may be as much a mirage as support for budget cuts once the GOP message machine gears up and they seem like they are imminent. As former congressman Artur Davis, a centrist Democrat from Alabama, put it recently at a Third Way breakfast, “I’ve never seen Democrats win an argument about taxes.”
The stakes — default, financial ruin, weakness — are much higher now. What happens in the next few months depends in large part on what lessons both sides have learned from this dress rehearsal, if any. It is easy to envision the impasse scenario: Obama and Democrats insisting on more tax revenue, survival of the health law and preservation of Medicare and Medicaid in their current forms, while tea-party-fueled Republicans insist on the opposite, and the argument continues right through the 2012 presidential campaign. Keep those shutdown plans handy. Chances are they’ll be needed.
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