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Posted at 3:53 PM ET, 02/14/2011

How Obama views the budget fight

By Greg Sargent

Reactions on the left to Obama's proposed budget can be rougly broken down into two camps. There is the camp that says he has needlessly capitulated to the GOP's anti-government rhetoric and has effectively ceded the game to the GOP by throwing in the towel on the very idea that stimulus spending is necessary for job creation.

Paul Krugman, for instance, reacts to the Obama budget this way:

The important thing, I think, is that he has effectively given up on the idea that the government can do anything to create jobs in a depressed economy. In effect, although without saying so explicitly, the Obama administration has accepted the Republican claim that stimulus failed, and should never be tried again.

Ari Berman sounds a similar note, arguing: "The president is playing on the GOP's turf. The debate is over cuts vs. cuts. At a time of 9 percent unemployment, neither party is laying out a roadmap for how to put people back to work and lift the country out of its economic morass."

In the second camp are those who argue Obama is cleverly reframing a battle with built-in advantages for the GOP. Jonathan Chait:

I actually see the administration's budget gambit as a subtle attempt to change peoples' minds. The administration is loudly publicizing the fact that it's cutting programs it thinks are necessary. The message, sometimes made explicit, is that the budget actually does not contain a lot of waste. It's filled with programs that have survived many previous rounds of belt-tightening for a reason. If you want to cut the budget, you have to cut useful and necessary things.

I don't think that this will have a big effect. But I do think Obama is trying, in a passive-aggressive way, to do what liberals have demanded. He's explaining to the public that the free-ride view of budget cutting -- we can cut our way out of the deficit by eliminating waste and spending that only benefits foreigners -- is wrong.

For what it's worth, Obama and his advisers clearly view their approach the way Chait has articulated it here. As they recently told E.J. Dionne, they think they've successfully been making a consistent case for a mixture of fiscal discipline and targeted government spending to boost the economy and secure the future. And as I've noted already, they think they will succeed in moving the argument beyond the GOP's preferred frame -- "big" versus "small" government" -- once the discussion focuses more on the specifics of what the GOP wants to cut, leading the public to prefer Obama's vision.

Of course, those in the former camp would argue that even if Obama is succeeding in reframing the debate, it's unclear what he'll end up with to show for it. They'd add that Obama seems to be proceeding from the assumption that he has a weaker hand than he really does. But then, that's been the critique of Obama from some on the left for much of his first two years. My bet is that if Obama makes good on his vow to aggressively relitigate the fight over the Bush tax cuts, critics on the left will become more open to the sympathetic interpretation of his overall approach. But that's a long time off.

At any rate, he's chosen his course, and soon enough we'll see what kind of results it produces. And then we can all start arguing about what would have happened if he'd done it differently.

By Greg Sargent  | February 14, 2011; 3:53 PM ET
Categories:  House GOPers, Senate Dems, budget  
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Next: Happy Hour Roundup

Comments

""And then we can all start arguing about what would have happened if he'd done it differently.""

Oh Goody.

Posted by: lmsinca | February 14, 2011 4:06 PM | Report abuse

Obama's proposed budget cuts the deficit by $1.1 trillion over the next ten years. Let's see now if the Republicans can cut even more.

Posted by: clawrence12 | February 14, 2011 4:06 PM | Report abuse

Anything that Obama does to disappoint Krugman just makes me like Obama that much more.

:)

Posted by: Kevin_Willis | February 14, 2011 4:13 PM | Report abuse

Just got back from the HHS briefing. There's an hour of my life I won't get back. But I did learn that eliminating waste, fraud and abuse is a miracle cure for budget problems. I think NIH is actively researching this

Posted by: NoVAHockey | February 14, 2011 4:13 PM | Report abuse

Obama's proposals are "more in the tradition of the St. Valentine's Day massacre" LOL!!!

http://www.larouchepac.com/node/17492

Posted by: clawrence12 | February 14, 2011 4:17 PM | Report abuse

"Obama's proposed budget cuts the deficit by $1.1 trillion over the next ten years."

And by how much does it raise taxes over the next ten years?

Posted by: sbj3 | February 14, 2011 4:19 PM | Report abuse

"And then we can all start arguing about what would have happened if he'd done it differently."

This better take a number, we're not done arguing about how the bailouts should have been done differently, how the stimulus should have been done differently, health care should have been done differently, the run up to the mid-terms should have been done differently, how fin reg and the tax capitulation/compromise should have been done differently. 2nd guessing Obama R us, signed, The Left

Posted by: shrink2 | February 14, 2011 4:21 PM | Report abuse

The key takeaway is that Obama's new budget is more evidence of his "shift to the center" after the mid-term elections. See Paul Krugman's graph of his triangulation:

http://krugman.blogs.nytimes.com/2011/02/14/the-new-obama-budget/

(Sorry Greg, I couldn't resist)

More substantively, Jonathan Chait is more credible with this observation than with the statement you quoted:

"On yet another hand, when you concede the basic principle from the outset -- that the appropriate response to an economic crisis that's driven deficits up and interest rates to the bottom is to cut the domestic budget -- you've sort of lost even if you've won. At some point, don't Democrats have to stop winning debates by conceding ideological ground and start changing the ideological ground, by challenging the public's views on government?"

One thing Obama's budget isn't doing is "changing the direction of the country" the way he says that Reagan did. When it comes to a battle of who is going to cut the budget more, the Republicans will win every time.

Posted by: jnc4p | February 14, 2011 4:36 PM | Report abuse

sbj3, there are lots of new taxes and "fees" indeed. Raising airport fees from $4.50 to $7 per flight is estimated to cost fliers an additional $2 billion per year, so that's a total of $20 billion over ten years. Janet Novak at Forbes.com is already doing the calculations on bringing back 2009 levels for estate tax ($550 billion over ten years) and reducing itemized deductions ($322 billion over ten years). So much for not raising taxes for those who make less than $250,000 per year!

Posted by: clawrence12 | February 14, 2011 4:40 PM | Report abuse

sbj3 asks
"And by how much does it raise taxes over the next ten years?"

Not enough to balance the budget, much less produce the surplus that will be necessary to pay off all those bonds in the social security trust fund.

Which begs the question: how did we go from a surplus 10 short years ago to the budget fiasco we're in now?

Posted by: bsimon1 | February 14, 2011 4:42 PM | Report abuse

@bsimon1 "Which begs the question: how did we go from a surplus 10 short years ago to the budget fiasco we're in now? "

Two wars, Medicare Part D, and the collapse of two unsustainable bubbles: tech stocks & housing.

The Washington Post has a good graphic that lets you compare the revenue versus spending since 1980:

http://www.washingtonpost.com/wp-srv/special/politics/30-years-spending-priorities-federal-budget-2012/?hpid=artslot

Posted by: jnc4p | February 14, 2011 4:45 PM | Report abuse

"how the stimulus should have been done differently, health care should have been done differently"

Related to this -- federal Medicaid spending will drop $7 billion due to the expiration of the enhanced matching rate that was included in the stimulus. So states either have to pony up or cut.

see p. 67 http://www.hhs.gov/about/FY2012budget/fy2012bib.pdf

Posted by: NoVAHockey | February 14, 2011 4:46 PM | Report abuse

$1.6 trillion in "fresh revenue" over the next decade, according to Lori Montgomery at the Washington Post. Eliminating $129 billion in tax breaks for corporations that do business overseas could cut jobs here in the U.S. too. The Republicans need to do their best to save jobs and cut elsewhere even more.

Posted by: clawrence12 | February 14, 2011 4:50 PM | Report abuse

"how did we go from a surplus 10 short years ago to the budget fiasco we're in now?"

Simple, financial deregulation, "free" trade, 9/11, two wars (with a surge apiece bonus), tax cuts, more financial deregualtion, mortgage bubble bust, financial meltdown, bailouts, stimulus, more tax cuts...the question is only whether we can reverse course. I'd be a lot more sanguine but for the housing situation.

Posted by: shrink2 | February 14, 2011 4:52 PM | Report abuse

@bsimon: "Which begs the question: how did we go from a surplus 10 short years ago to the budget fiasco we're in now? "

The Clinton surplus was (largely) mythological. So, the same way we got from having unicorns to not having unicorns.

http://www.craigsteiner.us/articles/16

And from USA Today:

""Congress and the president are able to report a lower deficit mostly because they don't count the growing burden of future pensions and medical care for federal retirees and military personnel. These obligations are so large and are growing so fast that budget surpluses of the late 1990s actually were deficits when the costs are included.

The Clinton administration reported a surplus of $559 billion in its final four budget years. The audited numbers showed a deficit of $484 billion.""

http://www.usatoday.com/news/washington/2006-08-02-deficit-usat_x.htm

Posted by: Kevin_Willis | February 14, 2011 4:58 PM | Report abuse

. . . which is not to discount Clinton's accomplishments. The Clinton administration was quite frugal, and fiscally responsible, compared to Dubya, or Obama, thus far.

Posted by: Kevin_Willis | February 14, 2011 5:01 PM | Report abuse

BTW: ""the Obama administration has accepted the Republican claim that stimulus failed, and should never be tried again""

Which is excellent.

Alas, I don't think, when the Republicans are in a position to spend money more flagrantly, they won't rename the manner in which pork is distributed and start spending like drunken politicians.

Posted by: Kevin_Willis | February 14, 2011 5:03 PM | Report abuse

Of course it makes sense that Claw/AKA JakeD is a follower of Lyndon LaRouche, and would be the one to post a link to LaRouchePAC

Posted by: Liam-still | February 14, 2011 5:03 PM | Report abuse

Well, this is reassuring. Dayen writes re: Geithner

"We’re just a few years removed from the financial oligarchs destroying the global economy through their own greed and negligence. And the man put in charge of regulating them, who had a front-row seat to all this destruction and who has been given expanded powers under Dodd-Frank to see to it that never happens again, thinks that there’s a great “financial deepening” about to take place where the demand for sophisticated financial innovations will jump. Therefore, the financial sector will need to grow and become the most reliable spur of the US economy. That’s his feeling. And regulation can reduce the risk, even though the new regulations barely put a dent into Wall Street’s core business, and are being systematically defunded besides.

Financialization of the economy has led to practically nothing but pain for the average worker and risk for the taxpayer. It has turned the allocation of capital into the placing of bets at a casino, and the stock market into a particularly sophisticated video poker game. This territory was all covered before in the run-up to the Great Depression as well, and we know the precise causes and remedies involved. Geithner prefers not to address the plutocracy he’s really advancing here – where elites provide “financial deepening” services abroad and amass ridiculous profits that they wall off. You have the Treasury Secretary of the United States, three years after a major financial crisis, saying out loud that what’s good for Wall Street is good for America."

http://news.firedoglake.com/2011/02/14/geithner-i-for-one-welcome-our-new-financial-overlords/

Posted by: wbgonne | February 14, 2011 5:06 PM | Report abuse

""And then we can all start arguing about what would have happened if he'd done it differently.""

Oh Goody"

It's human nature, Ims. Just this morning, I found myself wondering how different my life might have been had I understood, way back when, exactly what Bubbles O'Flaherty was trying to tell me.

Posted by: bernielatham | February 14, 2011 5:06 PM | Report abuse

The greatness every American President aspires to:

"which is not to discount Clinton's accomplishments. The Clinton administration was quite frugal, and fiscally responsible"

Posted by: wbgonne | February 14, 2011 5:09 PM | Report abuse

kevin: "The Clinton surplus was (largely) mythological. So, the same way we got from having unicorns to not having unicorns."

So Bush's tax cuts for the wealthy were based on BS?

Posted by: suekzoo1 | February 14, 2011 5:10 PM | Report abuse

Obama is thinking " how can i capitulate to my corporate masters today?"

Posted by: newagent99 | February 14, 2011 5:11 PM | Report abuse

P.S.

There are no more "economic bubbles." Now we have "financial deepening." Which is the same thing. Only good.

Posted by: wbgonne | February 14, 2011 5:15 PM | Report abuse

"So Bush's tax cuts for the wealthy were based on BS?"

To the degree they were based on "giving the surplus" back, I 'd say yes. I think that was mostly an excuse to execute a supply side tax strategy.

Which, given what I believe are anemic results, might also be characterized as quasi-mythological. It appears to me that we had already pushed the limits of supply side economics (and even most supply siders would suggest that a 0% tax rate is not sustainable for a robust economy, and not 1%, and perhaps not even 2%!).

That is, whatever the moral argument for not confiscating the wealth of billionaires (and surely there is one, at least in the abstract) the practical economic benefit of giving tax cuts to the upper classes seems to have been decidedly limited. And I'm a long time argue for "trickle down" economics, but I think there's a point on the curve where cutting taxes on the wealthy ceases to benefit the overall economy, and I think we're probably long past it. But, that's another discussion . . .

Posted by: Kevin_Willis | February 14, 2011 5:16 PM | Report abuse

"So Bush's tax cuts for the wealthy were based on BS?"

To the degree they were based on "giving the surplus" back, I 'd say yes. I think that was mostly an excuse to execute a supply side tax strategy.

Which, given what I believe are anemic results, might also be characterized as quasi-mythological. It appears to me that we had already pushed the limits of supply side economics (and even most supply siders would suggest that a 0% tax rate is not sustainable for a robust economy, and not 1%, and perhaps not even 2%!).

That is, whatever the moral argument for not confiscating the wealth of billionaires (and surely there is one, at least in the abstract) the practical economic benefit of giving tax cuts to the upper classes seems to have been decidedly limited. And I'm a long time argue for "trickle down" economics, but I think there's a point on the curve where cutting taxes on the wealthy ceases to benefit the overall economy, and I think we're probably long past it. But, that's another discussion . . .

Posted by: Kevin_Willis | February 14, 2011 5:16 PM | Report abuse

You are a brave man, Kevin Willis. However, I must point out that you are now a tyrannical communist.

Rock on.

O&O.

Posted by: wbgonne | February 14, 2011 5:23 PM | Report abuse

"You are a brave man, Kevin Willis."

You took the post right out of my fingertips, wbg!

Posted by: suekzoo1 | February 14, 2011 5:24 PM | Report abuse

@Kevin_Willis "That is, whatever the moral argument for not confiscating the wealth of billionaires (and surely there is one, at least in the abstract) the practical economic benefit of giving tax cuts to the upper classes seems to have been decidedly limited. And I'm a long time argue for "trickle down" economics, but I think there's a point on the curve where cutting taxes on the wealthy ceases to benefit the overall economy, and I think we're probably long past it. But, that's another discussion . . . "

I tend to buy Steve Pearlstein's rule of thumb that when you add all the income taxes together (local, state, Federal Income, FICA, etc) and get a rate over 50% that's when the supply side effects really start to kick in. Kennedy and Reagan really got the main supply side benefits of tax cutting. Changing marginal rates from 39% to 36% (or vice versa) isn't going to have a substantial supply side effect.

What may be true at this point is you could get a substantial supply side effect from revenue neutral tax simplification.

Posted by: jnc4p | February 14, 2011 5:32 PM | Report abuse

Government is NOT a word game. Politics is not a word game.


Isn't this column getting completely ridiculous?

Greg is probably repeating himself 25 more times on some silly liberal topic.

.

Posted by: AllSpendingMustBeCut | February 14, 2011 5:36 PM | Report abuse

The problem for Obama and his loyal minions is obvious, few believe that every penny spent by the government is funding "useful and necessary things".

Now that there are alternative media outlets the concerns raised by the left's opposition are more wide spread. For example many Chris Christie video snippets are distributed widely.

More and more people will see things like the Coburn report on federal training programs. Their blood will boil at the enormous amount wasted.


And then Obama and the left will demand a tax increase. yeah, go for it.

The simple fact is that Obama made a promise and didn't deliver. He said the trillion we let him borrow would keep unemployed at or below 8%. It didn't happen. None of the other stimulus spending did squat. It was a pay off to cronies and a bail out of spend thrift states that now must face a reckoning anyway. It was a waste.

Again, if Obama and his media lackies can't convince Americans that Obama is a legitimate American who believes in Christ, they can't convince people of much at all. Obama has a credibility gap. It is going to grow. Playing slimy politics that has as its end game the tax payers giving more of their hard earned money to the overlords in DC wont' get him reelected. But there is a low speed rail he can get on. All he'll need is tar and feathers.

Posted by: skipsailing28 | February 14, 2011 5:41 PM | Report abuse

According to Skippy, only those who believe in Christ, are real Americans. He said it folks.

That is all you need to know about Skippy The Religious Fundamental Wacko!

Posted by: Liam-still | February 14, 2011 5:58 PM | Report abuse

@Liam-still: ""According to Skippy, only those who believe in Christ, are real Americans. He said it folks.""

I'm pretty sure that's not what he said. To quote Skip:

""Again, if Obama and his media lackies can't convince Americans that Obama is a legitimate American who believes in Christ, they can't convince people of much at all.""

Which I read is saying that if Obama and his good friends in the media can't convince Americans that Obama is (a) a legitimate American and (b) a Christian then they won't be able to convince to the American people of much else.

That being said, I'm not sure that that large a segment of the people don't believe that Obama is not American or that Obama is not a Christian (at least, in the sense that many people call themselves Christian).

Posted by: Kevin_Willis | February 14, 2011 6:03 PM | Report abuse

Trickle Down does not work, because Fat Cats will only invest after consumers create the demand. Percolation works, and in order to Piss Of Joe The Plunger; let us call it Spreading The Wealth Around.

When you put more money in the hands of the working class, they spend it, and it creates more demand, and The Fat Cats get their share of the increased spending, in the form of additional profits.

We saw what happened, when the economy crashed in late 2008. The Fat Cats, with their Big Bush Tax Cuts refused to invest in job growth, to jump start the economy, and left it up to the Government to do so.

Keep in mind; we had plenty of people who became very rich, when the Clinton level tax rates were in place, and many millions of jobs were being created, and after The Fat Cats got their Big Tax Cuts from Bush, no more jobs were created, but a huge annual deficit was.

Posted by: Liam-still | February 14, 2011 6:10 PM | Report abuse

Sheesh, they do play for keeps in the Islamic Republic of Iran.

Hanged for chanting slogans at a protest...and I thought putting away those two sisters in Mis's'ipah for helping to rob $11 was harsh.

http://www.bbc.co.uk/news/world-middle-east-12272067

Posted by: shrink2 | February 14, 2011 6:11 PM | Report abuse

Bernie, that last post was a winner, as usual! ;-). On a different tack, a couple of weeks ago, in answer to a question from me (and thanks again for not only reading, but answering my question. I'm truly flattered) you more or less said that the President was beholden to the MIC. Do you think the same is true for the banking/financial sector?

Again, thanks for your fascinating comments and I look forward to your response (should you choose to, no pressure :-)).

Posted by: TrollMcWingnut | February 14, 2011 6:11 PM | Report abuse

Kevin,

I don't care what you claim to be pretty sure of, because the reality is: This is what Skippy wrote:

"Again, if Obama and his media lackies can't convince Americans that Obama is a legitimate American who believes in Christ, they can't convince people of much at all."

Posted by: Liam-still | February 14, 2011 6:13 PM | Report abuse

Kevin I have come to recognize that Liam-still simply can't get it right. He's been lying about me pretty regularly here using the same childish technique you noted.

I consider the source. Not much else, sadly, that can be done at this point. I don't know what remedy I have for his lying but it is folks like Liam that make me regret the loss of the code duello.

ah well.

the budget battle will be very entertaining. This will be a great place to take the temperature of the left. Perhaps lurking more and commenting less might make some sense. I doubt that reason will return to some of the die hards here once the house starts talking about what will be cut in the government.

Posted by: skipsailing28 | February 14, 2011 6:17 PM | Report abuse

Skippy,

Your own words, just as you wrote them:

"Again, if Obama and his media lackies can't convince Americans that Obama is a legitimate American who believes in Christ, they can't convince people of much at all.

...........................

"a legitimate American who believes in
Christ." You said it, you Religious Extremist, so stop trying to hide behind Kevin, now that you made the mistake of stating your mind.

I hope your daily counselors are aware of how you keep lapsing on here.

Posted by: Liam-still | February 14, 2011 6:21 PM | Report abuse

Shrink, a further query on the previous thread, if your interested. No pressure, you've already indulged me more than I deserve! ;-)

Posted by: TrollMcWingnut | February 14, 2011 6:30 PM | Report abuse

America has it's murderous fundamentalist wackos too.

"Arizona vigilante guilty of murdering Latino man, daughter"

http://www.cnn.com/2011/CRIME/02/14/arizona.double.killing.verdict/index.html?eref=rss_mostpopular

"CNN) -- An Arizona jury convicted anti-illegal immigration activist Shawna Forde of murder Monday in the killing of a Latino man and his 9-year-old daughter during a 2009 vigilante raid she led on their home.

The Pima County jury convicted Forde on eight counts, including the shooting deaths of Raul Flores and his daughter, Brisenia, and the attempted murder of the child's mother, Gina Gonzales, at the family's rural Arivaca home on May 30, 2009."


The should issue special auto plates;

Arizona; America's Cuckoo Nest.

Posted by: Liam-still | February 14, 2011 6:32 PM | Report abuse

America has it's murderous fundamentalist wackos too, yes indeed, mine was a very oblique way of saying they need to be kept out of government.

Posted by: shrink2 | February 14, 2011 6:38 PM | Report abuse

All, Happy Hour Roundup posted:

http://voices.washingtonpost.com/plum-line/2011/02/happy_hour_roundup_186.html

Posted by: Greg Sargent | February 14, 2011 6:39 PM | Report abuse

"Arizona; America's Cuckoo Nest."

Wow Liam, very poignant and ironic! I thank you for writing it. It will come as no surprise then that I grew up in Arizona! I'm Cuckoo for Arizona! Lol! Lol! Lol! ;-)

Posted by: TrollMcWingnut | February 14, 2011 6:41 PM | Report abuse

"America has it's murderous fundamentalist wackos too, yes indeed, mine was a very oblique way of saying they need to be kept out of government."

Shrink, you're killing me (pardon the pun)! Lol! ;-)

Posted by: TrollMcWingnut | February 14, 2011 6:50 PM | Report abuse

Failing to learn from Hoover .. cutting the budget during a deep recession is going to make it a lot worse, cascading layoffs. The stimulus should have been much larger and should not have included any tax cuts. Tax cuts just don't lead to growth.

Posted by: caothien9 | February 14, 2011 9:01 PM | Report abuse

No. You are under no obligation to remain with your current lender. But it is a good idea to let them know what you're planning to do so they'll offer you their best rate. If you need quotes from other companies search "123 Mortgage Refinance" they found me the lowest refinance rate i could get.

Posted by: lauracerny | February 15, 2011 6:20 AM | Report abuse

First Obama screwed our allies. Then he screwed our next generation. Now he is screwing the Democratic Party.

Dems will get wiped out in 2012.

Posted by: johnhiggins1990 | February 15, 2011 9:37 AM | Report abuse

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