Here comes Obama's new centrist budget...much like his old centrist budget

To progressives, President Obama's inclusion of chained-CPI in his 2014 budget looks like another case of Obama moving the goalposts on his opponents' behalf. Yesterday, Jared Bernstein offered this forlorn hope:

–No chained CPI!  No $100 billion more in NDD (non-discretionary spending) cuts!  These were both Obama offers to Rep Boehner in a grand bargainy sort of deal during the fiscal cliff squabble in December.  Neither should be on the table in the budget.  To put them there would be to meet the R’s way too far on their side of the field for no good reason.

I think I understand the strategy that says “don’t worry, progressives…we won’t enact either of these measures unless we get significant revenues.  And that’s unlikely.”

Tru dat.  But my game theory says keep your offers off the table until you’ve got their offers.  The problem doing it the other way is that you’re allowing the negotiations to start where you want them to end.  There’s the risk that the bargaining starts with with the stuff you’ve put on the table and goes down from there.  So the R’s say, “OK, we’re willing to nudge on revenues, but we’re going to need more cuts—beyond what you’ve already given us in the budget.”

 You could tell when you read that that Bernstein knew that Obama was going to do it.

If, however, the political goal is to make it look like Obama is moving far further in Republicans' direction than he has actually moved -- in effect leveraging their caricature of him as someone unwilling to reform Medicare and Social Security -- then he is getting a lot of rhetorical bang for the buck. " “Now THIS is a real budget. … THAT’S a real budget … exciting … a place to start.”

A "real budget" indeed: Pretty much the same as Obama's last budget, with the exception of chained-CPI, which everyone knows Obama put on the table last December. More subtle than Scarborough's displayed ignorance is Jackie Calmes' rhetorical merger of old proposed entitlement cuts with new (formally) proposed entitlement cuts:

De-deducting your way to $800 billion in new revenue

Available information about Obama's fiscal proposal is surprisingly sketchy, unless I'm missing something.  Forgive me, then, if I get something fundamentally wrong here. But the proposal is said to closely track Obama's 2013 budget, and it seems to me that if you moderately expand a key revenue raising proposal in that budget, it would be possible to raise $800 billion in revenue over ten years by reducing deductions for the wealthy. Maybe not desirable as an opening gambit, but hardly mathematically impossible.

The provision in question, on page 39 of the budget, would reduce the value of itemized deductions and other tax preferences to 28 percent for families with incomes over $250,000 and individuals with incomes over $200,000 (at 2009 levels, to be adjusted for inflation).  That is, suppose you're taxed at a 33% rate and you make $3600 in charitable contributions. At present, deducting that amount would lower your tax bill by $1200.  At a 28 percent deduction level, your bill would be lowered by $1008; you would pay $192 more.  That change, across all deductions, is projected to reduce the deficit by $584 billion over ten years.

Too narrow a tax base?

After praising Obama's willingness to tackle health care reform, impose a cap-and-trade program on carbon emissions, and do away with accounting gimmicks like placing war spending off-budget, Clive Crook offers a major caveat about the Obama budget:

In this "new era of responsibility", as the budget document is called, it would have been better for Obama to signal that huge and desirable initiatives like universal health care will impose at least some costs on all Americans. It is literally impossible to make the rich pay for everything, and telling 95% of voters that they can have all these things at no cost is not good leadership. It has even less to do with shared responsibility.

True, that. My chief worry about the governing compact Obama forged during the campaign is his promise not to raise taxes on any household with less than $250k in income. Obama's core domestic policy premises were that the U.S. needs to repair its safety net, reduce income inequality and improve opportunity through education. That means higher taxes for the affluent and some tradeoff of tax and benefit for the middle class, if lower tax burdens for the poor. I fear that on this point David Brooks was right: Obama boxed himself in on taxation during the campaign.