Obama’s Budget: It’s More Than Math Calculations

Originally posted at Capital Gains and Games. [1]

The fact that President Barack Obama’s fiscal 2013 budget released Monday adds up mathematically is almost entirely beside the point. The real question — the one we’ll be debating all year — is whether it adds up politically.

The 2013 budget does not include a short-term deficit reduction plan. That might seem counterintuitive until you consider the four main components to this year’s politics-of-the-budget equation that seem to have been most important to the White House as it put its proposal together.

The first is the overwhelming likelihood that nothing substantive or substantial will happen this year. This actually is one of the rare bipartisan agreements to come from Washington over the past few months. They might bemoan and decry the situation, but statements by Republicans and Democrats alike make it clear that few in either party think a deficit reduction deal of any kind is possible in 2012.

The only question is why this isn’t unanimous. Given the steady series of budget-deal-related failures in 2011, why is anyone still clinging to the hope that, absent a major budget-related crisis that allows elected officials to move from their current feet-in-cement positions, an agreement in 2012 is even remotely possible?

The second is the almost unprecedented hyperpartisan environment that exists today not just inside the Beltway but across the country. In this setting, anything the Obama administration proposes on any issue — but especially on spending, taxes, the deficit and national debt — is unlikely to generate much support from Republicans. No proposals from Republicans will be given so much as a glance by Democrats.

Given the partisan divide, it might be only a bit of an exaggeration to say that Obama’s 2013 budget would have been declared just as dead-on-arrival if it had included the exact same budget resolution with the precise Medicare premium support plan proposed last year by House Budget Chairman Paul Ryan (R-Wis.).

Third, polls now show that the deficit isn’t close to the top issue in the country. In some polls, it’s even close to the bottom of the top 10 and barely in double digits. Therefore, making deficit reduction the top priority in the budget would not be the most astute political move for the White House, and allowing the GOP to claim it as its primary issue will make that party seem out of touch to the majority of Americans.

That is, in fact, what the Obama budget seems to have assumed and is trying to do.

In putting together its spending outline, the White House also had to consider that there will be few opportunities for the GOP to exploit legislative leverage on the deficit issue this year.

A continuing resolution for all of 2012 is in place through the end of the year, and it’s hard to imagine that the GOP will threaten a government shutdown a month before Americans go to the polls. It also now appears that an increase in the debt ceiling won’t have to be considered until after the elections, so there will be no federal cash shortages or threatened (or imagined) defaults on U.S. debt.

That makes the payroll tax cut set to expire Feb. 29 the only real legislative cliffhanger between now and Election Day and the only opportunity for the GOP to demand budget-related policy changes or else. And given Monday’s announcement that House Republicans will not insist on offsetting spending cuts to pay for an extension, even that now has to be considered unlikely.

It also means that, with the White House refusing to focus on the deficit, there will be few opportunities for Congressional Republicans to make the president’s budget an issue over the next nine months.

One of the things to watch will be how often the administration makes any of its senior economic people available to testify on the budget at Congressional hearings. In addition, with former Office of Management and Budget Director Jack Lew, who was responsible for formulating the 2013 budget, unavailable to testify because he’s now White House chief of staff, the much lower-profile acting director, Jeff Zients, will be the person designated to appear on Capitol Hill. Zients will be able to claim that, as OMB deputy for management, he had limited involvement in the budget he’s being asked to defend.

The administration also isn’t likely to accept many invitations to speak or appear on Sunday talk shows if the budget is supposed to be the primary topic.

The final political consideration for the administration is also the most obvious: It’s an election year. It was clear from this year’s State of the Union address, when the deficit was barely mentioned, that the president wants to be the candidate who offers better times rather than the one who promises things such as spending cuts, higher taxes and reduced government services that cause stress or real pain for the average person.

This is hardly surprising, given that virtually everyone in the United States gets some type of tax or spending benefit from the federal government, including many of the biggest and most vocal opponents of big government.

The White House undoubtedly anticipated the criticism it has already received for not proposing to do more immediately on the deficit and has made yet another calculation that it will quickly fade as the focus shifts from what the budget includes to the pain the GOP is proposing. That actually adds up.