Four questions about Obama's deficit reduction plan

A speech is just a speech, and Ezra Klein seems to have an actual written plan outline from the White House [update: it's on the WH site, here].  On the basis of the speech, though, here are four questions about how Obama gets to $4 trillion in deficit reduction -- one partially answered by Klein:

1. Did Obama propose to cut $400 billion in defense spending?  Here is his wording: 

Just as we must find more savings in domestic programs, we must do the same in defense. Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again.

Two sub-questions: 1) does "do that again mean "save another $400 billion," or just "take on wasteful spending"?  More to the point: while Gates did cut an alleged $400 billion out of projected budgets for planned projects, that still left defense with annual budget increases exceeding the inflation rate.  Will the next $400 billion in 'savings' also leave the defense budget growing? [Update: the White House outline says the plan "sets a goal of holding the growth in base security spending below inflation, while ensuring our capacity to meet our national security responsibilities, which would save $400 billion by 2023."  Holding growth below inflation is a departure; according to Bloomberg, 2/16/11, "The U.S. Defense Department’s five- year weapons-buying budget, while lower than the military planned last year, still results in annual, inflation-adjusted growth of about 2.6 percent, according to an analyst.

Running behind the Gang of Six

On the theory that presidential advocacy on a given issue polarizes the parties on that issue, I have more than once suggested half-seriously that when Obama decides to put forward a deficit reduction plan, we will know that he's thrown in the towel on a deficit reduction deal. The corollary to date has been that if there's any hope at all for such a deal before the 2012 election, it lies in the negotiations of the Senate Gang of Six, who are using Bowles-Simpson as a baseline. GOP Gang of Six members Saxby Chambliss and Tom Coburn have been bucking GOP orthodoxy by acknowledging that any deficit reduction plan will have to increase Federal revenue.  What they don't need is Barack Obama to make that case for them.

So  now Obama is primed to lay out a plan, and word is that it is to be based (to what extent?) on Bowles-Simpson and the Gang of Six negotiations.  Predictably, the very senators who a month ago were begging for presidential participation are now warning that a presidential endorsement could be the kiss of death:

"The largest annual spending cut" -- compared to what?

I am getting tired of reading about "the largest annual spending cut in our history", which has now become an obligatory tagline in stories about the just-concluded and soon-to-come budget battles.  The alleged $39 billion   cut represents about 1.1% of the Federal government's 2010 outlays.  Is that really the biggest cut ever? By what measure? It must be in absolute terms only.

I realize this may be an imprecise comparison, but according to OMB historical tables the by-now-infamous spending cuts of 1937, which threw the recovering economy back into a sharp recession, took spending down from $7.58 billion in 1937 to $6.84 billion in 1938.  While I await correction by someone with more than sixth grade math skills or better historical knowledge, that looks to me like a cut of 9.8%, about nine times the magnitude of the 2012 cut just negotiated.

That, incidentally, is kind of reassuring.  The spending cut is not only about one tenth the dollar value of the new tax cuts enacted at the end of 2010, but one ninth the scale of the disastrous spending cut enacted in 1937.  The cuts will doubtless inflict needless social costs and environmental costs. But perhaps their impact on the economy (as on the deficit) will be relatively minor.

Am I comparing apples and oranges?  Economists and historians, let me know.

UPDATE: at least one summary of the budget deal's emerging details -- Politico's -- suggests that there may be less to the cuts than meets the eye (a hope I've indulged more than once):

But down to the end, the giant labor, health and education chapter of the bill best defined ground zero — and the relentless give-and-take over dollars.

Coming into this year, discretionary spending in this portion of the budget was running at about $169.4 billion, and the House voted in February to cut this to under $144 billion, a 15 percent reduction that decimated many programs. The new bill allows spending closer to $159 billion, about $15 billion higher. And even then to fill the gap, $6.2 billion in alternative savings from mandatory spending programs are available to offset new appropriations.

Within this framework, the White House locked in about $1.5 billion in increases that the president wants—like “Race to the Top.” But even after making room for these additions, the real appropriations cuts from existing programs will be about a quarter of what the House proposed...

Pell Grants for low-income college students are protected against a shortfall. Title X family planning programs will survive, albeit at 2008 levels. New money to administer health care reform will flow to the Centers for Medicare & Medicaid Services, but through a round-about route that requires the dollars to go first to a different health administration account and then be transferred to CMS.

In the field of transportation and housing, the same pattern is repeated, though in less dramatic fashion.

A charitable hope for a President trying faith

Catching James Fallows by accident on NPR on Saturday, I sent him a note to say I shared his bemusement that Obama, announcing the budget deal, would positively boast about "the largest spending cuts in history." Fallows' response nicely captures my own faith-watered-to-hope:

This is a rough  time. We will hope that the qualities we admire in Obama outweigh the ones that make us nervous.

Come to think of it, if a leader is not a monster, fool, or knave, isn't this a wish for all seasons?

When all else fails, believe what he says?

Kevin Drum, nonplussed as all progressives are by Obama taking credit for the 2011 spending cuts wrung out by Republicans, circles round to an unconsidered explanation:

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).

Is Obama his own Grover Norquist?

As David Brooks noted in the midst of the 2008 campaign, Obama has put himself in a box on taxes. Here's David Plouffe on Meet the Press today:

DAVID GREGORY:
--bring up taxes, though. Is-- in the President's plan as he envisions tackling the deficit, do taxes have to go up? Does that have to be part of this equation across the board?

DAVID PLOUFFE:
Well, this is part of his budget for next year. He has said he believes-- taxes on the higher income, people over $250,000-- should eventually go up.

Enough with the "what would China think?" shame spirals

This "whatever can the Chinese think?" meme is getting tired fast.  On Friday, Kerry; today, Kristof:

A bewildered Chinese friend asked me how the world’s leading democracy could be so mismanaged that it could shut down. I couldn’t explain. This budget war reflects inanity, incompetence and cowardice that are sadly inexplicable.

How about "explaining" that when faced with hard economic times extending through two election cycles, the American public twice threw out a set of incumbent officials -- as free electorates do -- and ended up with divided government?  The result is a bitter battle over fiscal policy. Those charged with making policy, instead of knifing out their radically different prescriptions behind closed Politburo doors, fought them out in a public display of negotiating brinkmanship and came up with a settlement in which both sides yielded some (though I personally think that through their own folly Democrats have yielded far too much).  There's nothing here to be embarrassed about before ruthless autocrats who have responded to the latest wave of democratic ferment abroad with a ferocious wave of repression and intimidation of dissent.

Donald Trump asserts faith in press, affirms Obama's U.S. birth

That is, if we read this part of his anti-Gail Collins screed literally:

For some reason, the press protects President Obama beyond anything or anyone I have ever seen. What they don't realize is that if he was not born in the United States, they would have uncovered the greatest "scam" in the history of our country.

How did we get to a $39 billion headline?

Taking up a question from one of yesterday's posts:

P.S. Watching Democrats apparently give ground yard by yard -- from accepting a reported $32-33 billion in cuts earlier this week to  $37-38 billion today, not to say even getting in this range in the first place  --  is so baffling that I wonder, by defensive reflex if nothing else, if there isn't more to this than meets the eye. Are some of those billions illusory, i.e. offloaded into areas Democrats don't care about or want to cut?  Has the weighting changed in some way that offsets the sticker amount?  

 And how, given the final sticker amount, can Obama find the "audacity" to claim this?

But beginning to live within our means is the only way to protect those investments that will help America compete for new jobs -- investments in our kids’ education and student loans; in clean energy and life-saving medical research. We protected the investments we need to win the future.

Here is a Dem answer -- or spin:

“1) $17 BILLION IN ‘CHIMPS’ -- WE SPREAD OUT THE CUTS ACROSS OTHER PARTS OF THE BUDGET. We insisted that meeting in the middle on cuts would require looking beyond domestic discretionary spending—and we prevailed. More than half—or $17 billion—of the final round of spending cuts came from changes in mandatory programs, or CHIMPs. The emphasis on this part of the budget staved off severe cuts to key domestic programs like education, clean energy, and medical research. 

"The CHIMPS," cried Mr. Rochester. "Deuce take me if I did not forget the CHIMPS!"*   Or make that Mr. Rogers (David), who explained back on April 3:

Obama owns the Tea Party cuts

I find it disturbing that in his statement about tonight's 2011 budget deal,  Obama not only accepts but takes ownership of the $39 billion in discretionary spending cuts:

Some of the cuts we agreed to will be painful. Programs people rely on will be cut back. Needed infrastructure projects will be delayed. And I would not have made these cuts in better circumstances.

But beginning to live within our means is the only way to protect those investments that will help America compete for new jobs -- investments in our kids’ education and student loans; in clean energy and life-saving medical research. We protected the investments we need to win the future.

Think again, Kerry

I admire the way John Kerry has comported himself since Obama took office -- re Afghanistan, re New Start, re Egypt -- but I think this is a foolish sentiment:

"They've got to be laughing at us right now" in China, said Senate Foreign Relations Committee Chairman John Kerry. "How terrific that the United States of America can't make a decision."

While Republicans and Democrats have been busy denouncing each other's policies and motives, the Chinese authorities have further reduced their tolerance for denunciation -- or criticism -- from anyone:

The palm goes to Boehner

If the rumored deal goes through tonight, it strikes me that Boehner is a winner.  I have to admit that I've been impressed with him in 2011.  In the endgame this week, he's managed to give the impression that a) he's being pushed from the right; b) he's faithfully representing the Tea Party agenda, and c) he does not want a shutdown. He's managed to rather massively move the goalposts on the Democrats (unless the spending numbers are jiggered and "40" somehow substantively equals "32") while holding out for the Tea Party riders to the point where prominent conservatives like Huckabee and Bachmann were urging him to deal.  He came home with at topline for cuts 33% higher than what Reid said earlier in the week was agreed on and an impression of having pushed as far as possible on the riders. For all the stories about Boehner being between a rock and a hard place, he seems to have wriggled through.

His victory, such as it is, may be a good thing. He didn't create, or elect, the Tea Party fanatics. He's a moderating influence.  He's given the (carefully meted out) impression that he can work with the President. And, to the extent possible in the age of GOP extremism, maybe he can.

Update, 11:38: a bit of supporting evidence from the Wall Street Journal:

Leaders of the small-government, tea-party movement are generally giving House Speaker John Boehner high marks for his leadership in the spending showdown, even though the agreement eventually reached Friday night fell short of the cuts the tea party once demanded.

Update, 4/9, 12:17: Weigel says it better:

Let’s go back to the raw politics. Can we say that Republicans got the better of the no-shutdown deal? Yes, because if there had been a shutdown, Republicans would have been blamed for it. The record was all cued up. Democrats spent months predicting that Boehner would have trouble controlling his new Tea Party members. They spent this week saying he had to put the Tea Party “horse back in the barn,” as Dick Durbin said. Well, there’s a deal – the implication is that he put the horse back in the barn. If the Republicans would have been blamed for a shutdown, it follows that they get credit for a shutdown being avoided.

One two three: what are we fighting for?

Not to deny that the House Republicans' cuts in discretionary spending will have negligible impact on the U.S.'s structural deficit, or that the near-$40 billion in cuts that it seems Democrats will inexplicably agree to won't cause unnecessary suffering and slow economic growth (Mark Zandi estimated that $61 billion in cuts would reduce employment by 700,000 through the end of 2012).  All that said, a brief zoom-out:

The Federal government spent $3.46 trillion in 2010.  Democratic proposals that became part of the late 2010 tax cut deal  (mainly the 13-month unemployment benefit extension, the payroll tax cut, and the stepped-up writeoff for business investment) were worth $336 billion, according to Zandi.  Last-minute Democratic concessions on the 2011 bill will probably take the spending cuts past the $34 billion that would make this comparison satisfyingly neat to someone with my sixth-grade math skills, but you get the idea.

Time to throw in the towel and 'lead'?

In my last post, I suggested that Paul Ryan's extremist, intellectually dishonest long-range budget plan is a sideshow -- that if there's any chance at all of a long-range tax/budget agreement, it rests with attempts by Chambliss, Coburn and perhaps Crapo to convince fellow Republicans that tax reform will have to increase federal revenues.

Now, though, Ezra Klein relays some intelligence that suggests that Ryan's plan may kill that admittedly distant hope:

Two days ago, I predicted that Ryan’s budget would sell a lot of Democrats on the Simpson-Bowles plan. But James Pethokoukis says it’s also doing the reverse. “I hear what GOP support there was for Obama/Bowles/Simpson debt panel plan is collapsing thanks to Ryan Plan,” he tweets. If that’s true, then Ryan, by yoking Republicans to a radical and polarizing proposal that stands no chance of passage, may have set the deficit-reduction effort a very long way back. 

Forget Ryan -- watch Coburn and Chambliss

For those who believe that Obama has failed a s test of courage by not rolling out a detailed tax reform/deficit reduction plan early this year, a thought experiment: had he done so, would Tom Coburn have said this on the Senate floor? (link is to Greg Sargent; emphasis is his.)

Well, the message for America today is every program’s going to get hit. The Defense Department’s going to get hit, every program’s going to get hit. My taxes are going to go up. Sorry, they’re going to go up. This country cannot get out of this mess with the behavior that we’re exhibiting in this body, and if we fail to do what is necessary for our country at this critical time in our juncture, history will deem us absolutely incompetent. With that, I yield the floor.Maybe...I admit that the thought experiment yields no clear results.  But if Obama and Dems really do want a tax reform/deficit reduction deal, it's Coburn Chambliss & Crapo who are carrying the ball. Because this can't happen unless Republicans sign on to tax reform that raises revenues.  Which is almost to say that it can't happen, period.

The sine qua non for a bipartisan long-range budget deal is for Republicans to acknowledge that taxes will have to be raised, albeit as part of a deal that lowers marginal rates while drastically reducing targeted tax breaks. The bipartisan Senate Gang of Six currently negotiating the outlines of a deal is allegedly using the Bowles-Simpson plan as a baseline. While Bowles-Simpson was  criticized from the left for achieving too high a percentage of its projected deficit reduction from spending cuts (two thirds) as opposed to taxes (one third), the plan did envision raising Federal revenue by about $1 trillion over nine years.  Grover Norquist, meanwhile, is waving his bloody-sheet "no tax increases" pledge, signed by (he claims) 95% of House and 87% of Senate Republicans.

Ruth Marcus's false "false false choice" charge

Purporting merely to debunk an irritating and misleading rhetorical device, Ruth Marcus has struck at the heart of Obamaism. Her target is Obama's fondness for what she calls a "false false choice':

The false-choice dodge takes three overlapping forms. The first, a particular Obama specialty, is the false false choice. Set up two unacceptable extremes that no one is seriously advocating and position yourself as the champion of the reasonable middle ground between these unidentified straw men.

I will argue further down that most of the Obama false choice tropes Marcus takes on are valid.  But first I want to spotlight the seriousness of the charge.  The false choice trope is not merely a tool of rhetorical combat. Setting things up this way reflects a core tendency in Obama's personality and approach to problem-solving.

Aliyah on an escalator

 Updated 4/4, below the jump

Writing in Scientific American, David Schroeder (hat tip to Sullivan) flags research indicating that we humans are literally elevated -- morally -- when we look up or step up.:

Building on research showing the power of metaphors to shape our thinking, Sanna and his colleagues noted that height is often used as a metaphor for virtue: moral high ground, God on high, looking up to good people, etc. If people were primed to think about height, they wondered, might people be more virtuous?

In a series of four different studies, the authors found consistent support for their predictions. In the first study they found that twice as many mall shoppers who had just ridden an up escalator contributed to the Salvation Army than shoppers who had just ridden the down escalator. In a second study, participants who had been taken up a short flight of stairs to an auditorium stage to complete a series of questionnaires volunteered more than 50 percent more of their time than participants who had been led down to the orchestra pit [referenced study here].

If that's true, cathedrals, and the world view that produced them, may really have given medieval Europeans a moral boost.  Here's C.S. Lewis inviting his reader to view the night sky with medieval eyes:

The unbearable lightness of me-ing

Thinking for a moment about a writer whose work I don't particularly enjoy though others whom I do like to read praise it highly, I started reflexively marshaling reasons for my dislike. Then I thought, why do this? Is it because I think that those who enjoy this work are seriously in error? No: I haven't paid it enough attention to ensure that my reasons are consistent or based in fact.  And why should I? If this person were promulgating serious errors of fact or logic or a depraved sensibility, a contra might be worthwhile.

But what's really behind this impulse, at least in this case, is something unsavory: a rooted belief that one's every preference is significant, worth broadcasting, cause for pride...a sign of one's superior sensibility or perception.  How can anyone like Brussels sprouts? They taste like condensed garbage.  Etc etc.  This impulse is evident on the playground: ew, you like Barney?

While writing this, I've really just been transposing a line of thought wonderfully dramatized and dissected by Milan Kundera in his novel Immortality:

An unfamiliar young woman entered the sauna and the moment she walked through the door began to order everyone about; she made them all sit closer together, then she picked up a pitcher and poured water on the stones. With much hissing, hot, steam started to rise, making the woman sitting next to Agnes wince with pain and cover her face. The newcomer noticed it, declared, "I like hot steam; it gives me that real sauna feeling," squeezed herself between two naked bodies, and at once began to talk about yesterday's television talk show featuring a famous biologist who had just published his memoirs. "He was terrific," she said.

Another woman nodded in agreement. "Oh yes! And how modest!

The newcomer said, "Modest? Didn't you realize how extremely proud that man was? But I like that kind of pride! I adore proud people!" She turned to Agnes: "Did you find him modest?"

Agnes said that she hadn't seen the program. As if interpreting this remark as veiled disagreement, the newcomer repeated very loudly, looking Agnes straight in the eye: "I detest modesty! Modest is hypocrisy!"

Agnes shrugged, and the newcomer said, "In a sauna, I've got to feel real heat.  I've got to work up a good sweat. But then I must have a cold shower. A cold shower! I adore that!  Actually I like my showers cold even in the morning. I find hot showers disgusting."

How about a doctor's mandate in the health reform law?

The Times' Robert Pear today reports on a major roadblock to expanding health care access in the United States: in many states, few or no doctors in a wide array of specialties will see Medicaid patients.  And the Affordable Care Act aims to add about 15 million people to the Medicaid rolls, while cash-strapped states continue to cut Medicaid reimbursement rates.

I have a solution. It's simplistic, and perhaps someone will demonstrate to me that it's unworkable or unfair. It's surely politically impossible at this point, given the power of the doctors' lobby.  But here it is: require doctors to devote a minimum percentage of their practice to Medicaid patients.  At present, about 28% of doctors refuse to accept any Medicaid patients.  The percentages are doubtless much higher in some practice specialties and states.

2010 tax cuts vs. 2011 budget cuts

As it looks all but certain that Republicans will extract at least a $30 billion pound of flesh from the 2011 budget, endangering the recovery and thus likely boosting their own political fortunes, I thought I would re-pose a question I asked earlier this month: Which is likely to be stronger, the stimulative effect of the tax cut deal Obama cut with the GOP at the end of last year, or the destimulative drag of reduced short-term government spending?

Who won the lame duck?

The late great lame duck session of Congress in Nov-Dec 2011 was widely perceived to have been a season of accomplishment for the Democrats and President Obama. The rush of activity included repeat of Don't Ask Don't Tell, ratification of the New Start treaty -- and, on the economic front, a tax deal that, for the blood price of extending the Bush tax cuts for the wealthiest, bought Obama hundreds of billions in more efficiently stimulative tax cuts.

It was a busy time, and one thing the Democrats failed to do was pass a budget for FY 2011. That gave the incoming GOP House the opportunity to commence its budget-cutting orgy for discretionary domestic spending a year early.  That includes a head start on the drive to defund implementation and enforcement of the health care and financial reform laws.  And in its opening gambit, the Tea Party delivered.  Its proposed $61 billion in cuts would kill 700,000 jobs by the end of 2012 according to Moody's economist  Mark Zandi,, and shave 1.5-2% off GDP growth in the 2nd and 3rd quarters of this year by Goldman Sachs' estimates.  The Goldman analyst, Alec Phillips, also forecasts that actual cuts in FY 2011 will come in at about $25 billion and, once enacted, will slow growth by 1% of GDP, but that the effect of that sudden hit will fade quickly later in the year.

Question: would the U.S. economy -- and Democrats -- have been better off without the global tax deal but with a Democratic FY 2011 budget passed during the lame duck session?  Does the short-term destimulative effect of the 2011 budget we're likely to get (leaving aside any long-term damage to economic viability) fully offset, or more than offset, the stimulative effect of the tax cut package?