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Obama's Brave Partners on the Hill

So far, Congress's great contribution to President Obama's ambitious budget blueprint mostly consists of reducing deficit projections by using some of the same accounting tricks that the administration was (justifiably) proud of itself for having purged from its plan.

It's not exactly "profiles in courage" time over there on the Hill.

Talking about Congressional action on his budget plan, Obama told reporters Tuesday night: "Now, we never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assume that it has to go through the legislative process."

If by "legislative process" he meant "smoke and mirrors" he was about right.

From what I can tell, the Senate version of his budget plan achieves "deficit reduction" primarily by putting off some tough decisions -- and by pretending there's no need to fix the alternative minimum tax.

The AMT, intended to insure that the very wealthy not escape paying a minimal amount of taxes, is increasingly snaring the upper middle class. Assuming that there's no fix is a convenient way to add billions of additional dollars to budget projections -- thereby shrinking the projected deficit. But it's blatantly dishonest because a de facto massive tax increase on the upper middle class is a political nonstarter. Team Obama took the high road in factoring a fix into their projections. The Senate, not so much.

And much of the "savings" in the House version come from simply deleting a $250 billion placeholder the White House put in the budget, in case the Treasury Department needs to spend more on its financial-sector bailout. Deleting the line in the budget does reduce deficit projections -- but it doesn't change reality.

Nevertheless, the White House was expressing delight yesterday over the Congressional action, because -- well, because so much of it was, essentially, a Xerox.

White House budget director Peter Orszag told reporters yesterday: "[W]e are very pleased that the House and Senate Budget Committees are taking up resolutions that are fully in line with the President's key priorities for the budget. Not only do they embody the four key principles that the President has put forward for the budget, but they are 98 percent the same as the budget proposal the President sent up in February....

"The resolutions may not be identical twins to what the President submitted, but they are certainly brothers that look an awful lot alike."

Carl Hulse and David M. Herszenhorn write in the New York Times: "Despite some apprehension among centrist Senate Democrats about the level of spending and future deficits, Mr. Obama’s appeal seemed to find a receptive audience. Democratic senators indicated increasing optimism about the prospects for approval of the fiscal blueprint after they pared spending and made other adjustments....

"Democrats said they shared Mr. Obama’s priorities.

"'His major objectives — green jobs, climate change-global warming, health care reform — that’s not just his agenda, that’s our agenda,' said Senator Thomas R. Carper of Delaware, who is part of a new group of moderate Democrats seeking to champion fiscal restraint."

Lori Montgomery writes in The Washington Post about Obama's trip to Capitol Hill yesterday to rally support. "Centrist Democrats who have complained that Obama's spending plan would drive the annual budget deficit to unacceptable levels held their tongues during the 45-minute lunchtime meeting. They asked no questions about deficits or about the administration's controversial push to force its signature investments in health care and education through the Senate without Republican votes."

Shailagh Murray blogs for The Washington Post that Senate Budget Committee Chairman Kent Conrad (D-N.D.) "has pressed back into service some Bush-era budget maneuvers that Obama wants to eliminate." Here's another one, in addition to the AMT scam: "Instead of a 10-year budget that shows deficits steadily accumulating, for example, Conrad is proposing a five-year spending plan."

As Andrew Taylor explains for the Associated Press: "Under Congress' arcane budget legislative process, lawmakers devise a nonbinding budget resolution that sets the terms for subsequent legislation. As a practical matter, the budget provides a pot of money to the appropriations panels to fund Cabinet agencies' annual budgets. But it also serves as a way to define party goals."

To the extent that the resolution punts on several tough decisions, Obama is still expected to run into some serious obstruction on the Hill down the road. Chris Cillizza blogs for The Washington Post about "the key generals in Congress who will decide the ultimate fate of the bill." It's a motley bunch on both sides of the aisle.

Jeff Zeleny writes in the New York Times about some of the tensions to come: "As he presses Congress to keep his ambitious agenda intact, Mr. Obama is navigating multiple constituencies within his party. Centrist Democrats in the Senate are trying to organize into a muscular bloc that is already putting its stamp on the president’s $3.6 trillion budget.

"At the same time, liberal groups, with tacit encouragement from the White House, are pushing back, trying to keep Mr. Obama’s core domestic initiatives — on health care, climate change and education — from being watered down in the legislative process."

Jay Newton-Small writes for Time: "The House bill includes a controversial provision for so-called reconciliation - which would leave the door open to piggyback massive programs like universal health care on the budget in case they fail to make it through the regular legislative process. House Democrats and the Administration support such a move specifically for health care — though, theoretically, the provision would allow for anything, including energy, to be pushed through the Senate with just a simple majority rather than a filibuster proof 60 votes. Several moderate Democratic senators, including Senator Ben Nelson of Nebraska, have said that inclusion of reconciliation instructions in the final bill would be a deal breaker for them."

In his talk with reporters, Orszag said "reconciliation is not where we'd like to start, but we are not willing to take it off the table."

Meanwhile, Philip Rucker writes in The Washington Post: "President Obama defends his proposal to cut the tax deductions that wealthy Americans can claim for their charitable donations by arguing that the shift would not have an adverse effect on giving, but two independent analyses concluded that the proposal could result in a drop of as much as $3.87 billion for the already reeling nonprofit sector....

"But a report from the Center on Budget and Policy Priorities said total charitable contributions would decline by about 1.3 percent, while the Center on Philanthropy at Indiana University calculated that overall giving would drop by 2.1 percent. The highest-income households would decrease their giving by 4.8 percent, or $3.87 billion, the latter group found."

Read those reports, however, and the tone is a bit different.

The Center on Philanthropy concludes: "The Obama Administration's proposals to reduce the tax deduction high income taxpayers can take for charitable gifts and to increase the top personal income tax rate, would, by themselves, have a relatively small negative effect on itemized charitable giving."

And the CBPP says: "President Obama’s proposal to limit the tax deduction for charitable contributions would affect only the top 1.2 percent of affluent U.S. households and, despite claims to the contrary, would reduce total charitable contributions by only 1.3 percent."

Rucker notes: "Administration officials said the proposal should be considered within the totality of the budget. The policy change would help finance efforts to reform the nation's health-care system, said Kenneth Baer, a spokesman for budget director Peter Orszag."

And what about those brave members of Congress? "In Congress, members of both parties have spoken out against Obama's proposal since it was introduced last month."

E.J. Dionne Jr. writes in his Washington Post opinion column: "The debate on the budget is phony, the howling on deficits a charade. Few politicians want to acknowledge that if you really are concerned about long-term deficits, you have to support tax increases."

And Alice M. Rivlin, in a Washington Post op-ed, has a few suggestions about where to start.

By Dan Froomkin  |  March 26, 2009; 11:05 AM ET
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I will support across the board tax increases if some brave politician would accept reality and propose that we actually try and reduce the deficit. We cannot continuously borrow like Wimpy for a hamburger today with the false intent of paying it back tomorrow. The time has come for a populist message which should be: "Strength and prosperity through debt reduction and balanced budgets!" I am less worried about the recession today than I am about a rampant devaluation of the dollar because of excessive federal debt. We recover from recessions in 2-5 years with some short term pain. How long will it take to recover from a major event caused by the debt burden? What kind of pain will we face when the bill comes due? Unfortunately, I think we will find out in my lifetime.

Posted by: mraymond10 | March 26, 2009 6:23 PM | Report abuse

mraymond10 has a reasonable position, but right now, the government has to go into serious deficit to overcome this temporary strong recession. Many have pointed out that the US only really got out of the depression when World War 2 started. What most forget about that is that money had to be massively borrowed in order to fund World War 2. (Taxes didn't rise to pay for World War 2!)

Posted by: michael_chaplan | March 26, 2009 8:33 PM | Report abuse

Taxes did rise to pay for WWII, and they stayed there for decades. The top rate was 95 percent until Kennedy! The boom of the 50s was built on the backs of the top earners, and the estate taxes, excise taxes, and capital gains taxes were very high. But those high taxes encouraged the greedy and vain to work harder to make that money so they could show themselves to be better than their neighbors. Can we tax Paris Hilton into usefulness? Let's find out!

Posted by: sparkplug1 | March 30, 2009 8:04 PM | Report abuse

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