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Obama's Budget Plan Leaves Him Boxed In Obama's Budget Plan Leaves Him Boxed In

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Obama's Budget Plan Leaves Him Boxed In

The good news is his box is no worse than the Republicans'.


Obama's speech on Wednesday puts him in the middle of the debate over the country's long-term debt. A week earlier, shown here, he announced an agreement on spending cuts in this year's budget.(Joshua Roberts-Pool/Getty Images)

President Obama finds himself boxed into a corner as he prepares to unveil his plan to reform entitlement programs on Wednesday.

He faces Republican momentum on spending cuts, a well-received (if untenable) first draft of a $4.4 trillion debt-reduction budget proposal by Rep. Paul Ryan, R-Wis., and nagging doubts within his party about his willingness to stick up for liberal principles. The White House considers these problems to be small flare-ups in a war of attrition.


Obama’s political strategy, which he has already hinted at in other budget-related speeches, is to force the belligerents to deal on his terms. He’ll do this by drawing contrasts.  Obama will set the limits now, and spend the next six months pushing hard to make sure Republicans can’t cross them.

He will not accept Ryan’s proposal to turn Medicare into a voucher system, nor will he endorse the breakup of Medicaid into block grants for the states.

He will not accept a deficit-reduction plan that draws all of its force from government-transfer programs aimed at poor and middle-class Americans.


He will not accept a plan that doesn’t ask the rich to pay more, both by raising marginal income tax rates back to pre-2003 levels for some and by lifting the cap on wages subject to the Social Security tax.

Many of his specific proposals will come from his deficit-reduction commission, chaired by Clinton White House Chief of Staff Erskine Bowles and former Sen. Alan Simpson, R-Wyo. It was far from Obama’s mind when the report came out last year, but it now suddenly provides political cover. Six senators have decided to try and draw up their own plan using Simpson-Bowles as a starting point, and the White House will try to keep the so-called "Gang of Six" closely involved in their own process.

White House officials know that Republicans won’t agree to tax hikes.  

But there’s enough overlap between the two parties to find some areas of accord: Defense spending is on the table for the first time since the end of the Cold War. Obama can use the cost-cutting measures in his own health care plans as leverage when negotiating with Republicans on Medicare and Medicaid. There is a surprising level of agreement on the need for tax reform, and closing a number of major tax loopholes that large majorities of Congress want to shut.   


Ideally, after trench warfare for several months, Congress would scrunch all these plans together and come up with a major reorganization of the budget. That’s not likely. But it’s in Congress and the White House’s interest to show Americans that they figure out how to agree on big things. That’s why, in the end, the possibility exists for a deal.  

It would be small, but large enough to convince voters that Obama, known for profligate spending during his first term, has a vision for lean government during his second. If he crosses the threshold, he’ll negotiate with Republicans from a position of strength. Similarly, if Republicans embrace an unpopular plan to pulverize Medicare, if they try to blackmail the White House into accepting significant spending cuts by refusing to raise the debt limit, if Republican presidential candidates, in peacocking to the right, move further away from the center, then all the better.

So the president wants to preserve the core elements of the three main entitlement programs—Social Security, Medicare, and Medicaid—bolster the cost-curve-bending contraptions in the new health care law, and maintain a level of spending on education, the environment, and transportation that he believes will keep America competitive. He gets there by losing the present: since Republicans control the House of Representatives, they get to set the terms of the budget debate. Base Democrats and organized liberal activists hate this.

In their mind, by accepting the premise that the priority ought to be deficit reduction, Obama’s already conceded that Democratic principles are not worth fighting for. It’s a familiar refrain, to which the White House response remains the same: accept the reality and get rid of your partisan myopia. on Tuesday urged Obama not to cave to Republicans yet again, while another progressive group is organizing a campaign to withhold donations from Obama’s reelection campaign if he touches the entitlement programs.

Hence the corner Obama finds himself in. 


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