If there were any doubts about the political skills of the new White House team under Chief of Staff William Daley, they have now been satisfied.
Recently, the Congressional Budget Office reported that President Obamas budget had underestimated the deficit over the next 10 years by $2.3 trillion. Deficits will exceed 4 percent of gross domestic product each year, with the federal debt eventually rising to 87 percent of the total economy. Obamas budget plans are a gaudy spectacle of irresponsibility.
In spite of this, Obama now has Republicans cornered in budget negotiations. By accepting $33 billion in cuts for the remainder of 2011, Obama has taken the middle ground and exploited a major division within the Republican coalition. The administration has transformed a weak record into a strong political position.
What made this possible was Obamas willingness to betray progressives in Congress even before the budget conflict began. In February, Senate Majority Leader Harry Reid had criticized spending reductions in the range of $30 billion as draconian and unworkable. Now that figure is a floor. The left has already lost the budget battle though the right has not yet won it. Obama clearly takes liberals for granted, shoring up his own fiscal reputation at their expense. Given their quiescence, it seems a good strategy.
This maneuver has also placed House Speaker John Boehner in exactly the position he wanted to avoid. Obamas offer is more than reasonable. A $30 billion reduction, after all, was the initial Republican negotiating position back in early February. Given that Republicans control only the House, this level of cuts would normally be viewed as a remarkable success. But a portion of the Republican conference longs for a confrontation that results in a government shutdown, preferring a fight over a victory. And the only worse outcome for Boehner than a politically risky shutdown is a deeply split conference, pitting the Republican establishment against Tea Party purists a result that would undermine all future Republican progress.
So Obama has managed to lighten his liberal baggage, turn Republicans against each other and ensure they would be (justifiably) blamed for a shutdown. Not a bad months work.
This strategy may succeed because Republicans are genuinely divided. One bloc the faction of the serious is led by Rep. Paul Ryan (R-Wis.), author of the 2012 House Republican budget. Few details of that document are surprising, but the cumulative effect is comprehensive and impressive. House Republicans propose major tax reform, including lower top rates, a broadened tax base and the closing of loopholes. The plan sets hard spending caps and adopts a number of recommendations from the presidents fiscal commission, which were largely ignored by the president himself. Ryans proposal takes on corporate welfare and farm subsidies, consolidates job-training programs, and includes welfare and litigation reforms. Most important, Ryan begins the Medicare debate in earnest, proposing a system of means-tested premium supports taking seriously the challenge of 80 million baby boomers beginning to make their way into the system. Unlike his more libertarian colleagues, Ryan makes the case that entitlement reform, properly designed, can actually strengthen the social safety net for the poorest.
The less-than-serious faction of the Republican Party is intent on squeezing more savings out of the 2011 budget or pursuing a government shutdown as an end in itself. Some of this bloc is composed of House freshmen, who share the unrealistic expectations of the Tea Party base the undoing of modern government by one-half of one branch of that government. Others are more senior members of the Republican caucus representatives such as Mike Pence and Michele Bachmann who seek to raise their profiles by establishing themselves as rebel leaders.
Even by the most exacting conservative standards, the contrast of ambition and sophistication should be clear. Ryan Republicans are talking about trillions in eventual entitlement savings that would release America from perpetual debt and allow some room for future discretionary spending. They are proposing a series of broad structural reforms, each of which will be a plank in the 2012 Republican platform. Pence Republicans seek billions in savings achieved through a strategy that, in 1995, helped rescue the Clinton presidency. Their policy platform shows all the creativity and strategic positioning of a stop sign.
Boehners task is to persuade House Republicans to take a good deal for the rest of the year and focus on next years battle over the Ryan budget. This fight will be considerably more difficult and dramatically more consequential.
