Obama borrows time with deficit reduction plan

McClatchy NewspapersApril 13, 2011 

WASHINGTON — President Barack Obama's proposal to cut projected budget deficits is an attempt to buy time — for the government, for the economy and for himself.

By tripling the plan he rolled out just two months ago, Obama tried to convince wavering members of Congress to approve an increase in the government's debt ceiling that's critical to keep the government from defaulting.

By putting off much of the pain, Obama hoped to leave more time for the fragile economic recovery to take hold.

And by framing his pitch as a middle ground between Republican opposition to tax increases on the wealthy and rising liberal anxiety over spending cuts, he hoped to appeal to independent voters who hold the key to his own re-election next year.

"We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt," Obama said in a speech in Washington. "And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs and win the future."

His proposal to cut projected deficits by $3 trillion over 10 years — $ 4 trillion when measured over 12 years — is nearly three times larger than his own pitch in February to curb the red ink by $1.1 trillion over a decade.

It comes after he's been criticized for brushing aside the recommendations of his own bipartisan deficit commission and insisting on waiting for the Republicans to make the first big proposal to cut the deficits. "If you look at the history of how these deals get done, typically it's not because there's an Obama plan out there," he said when he proposed his budget in February. "This is not a matter of you go first or I go first."

Since then, however, Republicans, who control the House of Representatives have seized control of the agenda. They demanded spending cuts in the current fiscal year. They proposed a plan to cut deficits by $4.4 trillion over 10 years. And they've warned that many would oppose raising the debt ceiling absent further agreement on budget cuts.

"He's lost control of the agenda," said Dennis Goldford, a political scientist at Drake University in Iowa. "But he's framing in such a way that he leaves some running room for himself."

Obama's first objective is getting Congress to raise the legal limit for debt, now set at $14.3 trillion. With debt rising and due to hit the ceiling sometime before July — regardless of any budget plan now being debated — the government would default on its obligations if Congress doesn't act.

Obama said he'd kick off a new round of high-level talks on the new budget proposals in May, led by Vice President Joe Biden, with a June deadline. That would make the talks — and the president's proposal — the centerpiece of the debate over the debt ceiling as it enters the summer.

Initial responses from Republicans were skeptical, at best.

"He is asking Congress to raise the debt limit to continue paying Washington's bills," House Speaker John Boehner, R-Ohio, said after Obama spoke. "The American people will not stand for that unless it is accompanied by serious action to reduce our deficit. More promises, hollow targets, and Washington commissions simply won't get the job done."

But if the Biden talks are successful at producing an agreement, it would come just in time for Congress to vote to raise that debt limit.

"Most economists agree that the debt ceiling has got to be passed. And yet the president has really not made his case," said independent pollster John Zogby. "By addressing this now, it at least allows him to speak on that issue next."

Second, while Obama boasted of his broad proposal to curb deficits, he'd delay the spending cuts he thinks would endanger an economic recovery that's just starting to gain strength.

He also left some of his spending cut proposals vague.

He said he'd cut $100 billion over 10 years from Medicaid, the state-federal health care program for the poor, by making it "more flexible, efficient and accountable" He said he'd cut $200 billion out of Medicare, the program for the elderly, by challenging a new board to recommend savings. If Congress won't approve the unidentified savings, his administration would.

The White House also said that $1 trillion in deficit reduction would come in years 11 and 12, beyond the 10-year period traditionally used in budgets.

Leonard Burman, a professor of public affairs at Syracuse University and a nationally recognized expert on tax policy and budgets, said that back-loading some of the cuts would help keep the recovery going now.

"The economy is still pretty fragile, so the immediate cuts would be pretty dangerous and could throw us back into recession," he said.

Finally, Obama's message was crafted to thread a political needle between Republicans and Democrats and stake out a lofty position above the partisan sniping that turns off independent voters.

He noted, for example, the fears among Democrats and liberals that any concession on entitlements would open the way to greater cuts.

Two liberal groups — MoveOn.org and the Progressive Change Campaign Committee — both warned Wednesday that they'd had enough of Obama's concessions to Republicans on budget cuts.

"If you cut Medicare and Medicaid benefits for me, my parents, my grandparents or families like mine, don't ask for a penny of my money or an hour of my time in 2012," said a petition circulated by the Progressive Change Campaign group.

"I understand these fears," Obama said. "But I guarantee that if we don't make any changes at all, we won't be able to keep our commitments to a retiring generation that will live longer and face higher health care costs than those who came before."

He also insisted he'd stand up to the Republicans on the need to raise taxes on wealthier Americans. He proposed $1 trillion in new taxes on the wealthy — on top of letting Bush-era tax cuts in taxable incomes over $200,000 for individuals and $250,000 for families expire, as scheduled, on Dec. 31, 2012.

"Some will argue we shouldn't even consider raising taxes, even if only on the wealthiest Americans," he said. "I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don't need another tax cut. Warren Buffett doesn't need another tax cut."

It will be a challenge.

While the White House wants to think it can take liberals for granted — where else would they go — the lesson of the 2010 mid-term elections is that they can get turned off and stay home.

And he has to get independents to like him again as they did in 2008, and as they decidedly didn't in 2010.

They want to cut spending, but mostly they want the economy to recover and jobs to come back. Said Goldford of Drake University: "It's all about independents."

(Kevin G. Hall contributed to this story.)

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