Sunday, February 20, 2011

A credulous view of Obama's budget/tax strategy

With regard to the looming budget battle and any concurrent negotiations for a long-term deficit reduction plan: as all kinds of mostly faux budget hawks raise their histrionic moral-equivalent-of-war cries about the deficit, the shape of Obama's strategy, beginning with the SOTU, is clearer to me.

A budget deal, for Obama, is means to an end: preserving the country's capacity to make the investments in education, infrastructure, new industries and health reform that have always been essential to his political program.  As the process begins, rather than "lead" as to the means of budget reduction, Obama chose to lead by keeping the end in mind: enabling sustainable economic growth. That means laying down a marker: spending reductions can't come at the expense of the investments that are his top priority.  The looming war over the current budget can't just be about how much is cut, but whether the cuts crimp prospects for future growth (or the prospects for meaningful cost control, e.g. by defunding implementation of the PPACA).


In the SOTU, say what you will about the Sputnik analogy, the 'don't throw the engine out of the jet' metaphor is the nub of where Obama is starting from. (My own mental handhold for this concept is from Monopoly: if you have to mortgage all your hotels and houses, i.e. your economic engine, you can't "grow").  He seems to have taken to heart some version of Brendan Nyhan's warning: presidential speeches can't effectively influence public opinion in immediate policy battles over something specific like spending and tax levels. As a corollary, though, Obama seems to have bet that he can exercise influence on the broader and more positive meme that the long-term investments he has always stood for are crucial to the country's long-term prosperity.  Look back at his December press conference about the budget/tax cut deal with Republicans for the coming year:
So my job is to make sure that we have a North Star out there. What is helping the American people live out their lives? What is giving them more opportunity? What is growing the economy? What is making us more competitive?
A budget deal is the enabler.  Education reform, healthcare reform, energy policy reform and infrastructure investment are his answers to those questions.


In the SOTU and in his budget, Obama has book-ended the tax/spending negotiation process: left, protect the possibility of making the investments he's always talked about; right, show good faith on the discretionary budget by proposing rational cuts to contrast with the House GOP's meat ax. Center: let the Senate work and choose the right moments to steer the process with his state priorities -- as he did with the PPACA.

P.S. This post started as a postscript  to the last, which looked at a  Bowles-Simpson op-ed in today's Washington Post that takes the president's opening gambit at face value and converts it into a challenge.

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