My best guess is also the most boring one: He actually thinks the cuts are a good idea. Macroeconomically they don't make sense, but as a signal they might be pretty powerful...my guess is that (1) Obama is serious about wanting to rein in the long-term deficit, (2) he thinks the cuts in this year's budget are a good way of signalling his seriousness, and (3) he also thinks that a few tens of billions of dollars in lost spending will have such a minor macroeconomic effect that it's a small price to pay.Isn't it pretty to think so? Like Drum, I struggle (here, here) with the gravitational pull of trusting Obama (and on the weekend, I speculated that the tax cut binge of late 2010 may have increased Obama's urge to gesture toward offsetting spending restraint). On the yield side, I would add that his claim that the just-concluded deal preserves his priority investments (as outlined in the SOTU) is worth at least a look as details emerge this week (along with Democratic claims that $17 billion of the cuts were offloaded onto mandatory spending programs, if that's anything to be cheered about).
To broaden Drum's point, note too that Obama generally subscribes -- on the merits, he claims -- to economic policy to the right of progressive consensus. Examples include devoting more than a third of the original stimulus to tax cuts in early 2009; yielding in late 2010 on extension of all the Bush tax cuts in exchange for the payroll tax cut, unemployment benefit extension and stepped-up writeoff for business investment; and proposing a federal spending freeze late last year as a down payment on substantive budget reform.
To frustrated allies, these policies look like "negotiating with yourself." We would all feel better if Obama drew clear lines, avoided preemptive Republican-lite proposals and lambasted GOP fiscal insanity. And common-wisdom impulses -- stand up to an implacable foe -- may well be on target: waiting for Obama's placation to end can be like waiting for Godot. For Obama, however, the possible tactical advantage of starting negotiations to the left of where he wants to end up might be offset by the danger of appearing more liberal than he is. And the measure of his centrist and placatory approach can't really be taken until the major budget fights looming this year are done.