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The political calculus of President Obama's 2014 budget plan The political calculus of President Obama's 2014 budget plan
(6 months later)
President Obama has adopted a "middle of the road" approach to social entitlement reform in his 2014 budget. Proposed changes in the cost of living adjustment – the so-called chained CPI – would slow benefit increases for future retirees, though they would only make modest savings. The budget essentially repeats Obama's offer to Republican House speaker John Boehner in December 2012, as part of an end-of-year deal on expiring tax cuts.President Obama has adopted a "middle of the road" approach to social entitlement reform in his 2014 budget. Proposed changes in the cost of living adjustment – the so-called chained CPI – would slow benefit increases for future retirees, though they would only make modest savings. The budget essentially repeats Obama's offer to Republican House speaker John Boehner in December 2012, as part of an end-of-year deal on expiring tax cuts.
One way of seeing this is that Obama is setting a trap for Republicans around a grand bargain on entitlement reform, which he likely knows if impossible for them to agree to; but the public blames the GOP for the lack of agreement on a budget compromise, then voters may punish them, rather than the president's party, at the next midterm 2014 elections.One way of seeing this is that Obama is setting a trap for Republicans around a grand bargain on entitlement reform, which he likely knows if impossible for them to agree to; but the public blames the GOP for the lack of agreement on a budget compromise, then voters may punish them, rather than the president's party, at the next midterm 2014 elections.
To drive home the point that he's serious about a bipartisan agreement, however, Obama has organized a candlelit dinner with moderate Senate Republicans Wednesday evening (in fact, the follow-up to a first such dinner in March). The soiree's proclaimed objective is to build a "caucus of common sense" with Senate Republicans. But Republicans are not too keen in reaching a deal, as GOP Senator Orrin Hatch of Utah has made clear:To drive home the point that he's serious about a bipartisan agreement, however, Obama has organized a candlelit dinner with moderate Senate Republicans Wednesday evening (in fact, the follow-up to a first such dinner in March). The soiree's proclaimed objective is to build a "caucus of common sense" with Senate Republicans. But Republicans are not too keen in reaching a deal, as GOP Senator Orrin Hatch of Utah has made clear:
"I look forward to seeing what he wants to discuss. Unfortunately, it seems to always come down to revenues and more and more taxes. And we're just not going to do that.""I look forward to seeing what he wants to discuss. Unfortunately, it seems to always come down to revenues and more and more taxes. And we're just not going to do that."
Senate Republicans are constantly telling the president that they are not interested. So why does he not get the message? Why act like Gigi, the female character in He's Just Not That Into You, who keeps misreading signs from her romantic partners after they fail to call her back and respond to her text messages?Senate Republicans are constantly telling the president that they are not interested. So why does he not get the message? Why act like Gigi, the female character in He's Just Not That Into You, who keeps misreading signs from her romantic partners after they fail to call her back and respond to her text messages?
The answer is simple. Obama is telling the electorate that – unlike stubborn, obstructive Republicans – he's willing to compromise for the nation's sake. Of course, he cannot say this openly. But it's clear that Republicans' predictably dismissive response to his gentle coaxing can only sharpen the apparent contrast between his reasonable approach and his adversaries' unwillingness to compromise.The answer is simple. Obama is telling the electorate that – unlike stubborn, obstructive Republicans – he's willing to compromise for the nation's sake. Of course, he cannot say this openly. But it's clear that Republicans' predictably dismissive response to his gentle coaxing can only sharpen the apparent contrast between his reasonable approach and his adversaries' unwillingness to compromise.
That the president has angered his liberal base by proposing to cut spending on Medicare and social security could also play in his favour. Meanwhile Medicaid is spared from spending cuts, as are most means-tested programs. Electors can draw their own conclusions: unlike Boehner, who remains careful not to alienate the Tea Party caucus and conservative Republicans, Obama seems willing to antagonize the left for the common good.That the president has angered his liberal base by proposing to cut spending on Medicare and social security could also play in his favour. Meanwhile Medicaid is spared from spending cuts, as are most means-tested programs. Electors can draw their own conclusions: unlike Boehner, who remains careful not to alienate the Tea Party caucus and conservative Republicans, Obama seems willing to antagonize the left for the common good.
In fact, the Democratic base should take a closer look at some of the Obama budget's proposals for tax reform on the loopholes and exemptions currently claimed by many of America's top-earners. Answering Warren Buffett's famous observation about the unfairness of a billionaire like him paying a lower rate of taxes than his secretary, the 2014 budget contains a "Buffett rule" proposal to ensure a minimum 30% tax rate for household income over $1m. Another element of Obama's package is to tax "carried interest" – a notorious exemption for private equity and hedge fund managers.In fact, the Democratic base should take a closer look at some of the Obama budget's proposals for tax reform on the loopholes and exemptions currently claimed by many of America's top-earners. Answering Warren Buffett's famous observation about the unfairness of a billionaire like him paying a lower rate of taxes than his secretary, the 2014 budget contains a "Buffett rule" proposal to ensure a minimum 30% tax rate for household income over $1m. Another element of Obama's package is to tax "carried interest" – a notorious exemption for private equity and hedge fund managers.
Given how remote the likelihood of a "grand bargain" budget deal, these proposals have even less chance of getting through Congress than the chained CPI offer. But they do mean that the president has laid down a marker for what the White House would expect to get from a thorough-going reform of the tax code, due to be debated later this year.Given how remote the likelihood of a "grand bargain" budget deal, these proposals have even less chance of getting through Congress than the chained CPI offer. But they do mean that the president has laid down a marker for what the White House would expect to get from a thorough-going reform of the tax code, due to be debated later this year.
Of course, the president's compromise strategy carries its own political risks. Obama could end up negotiating with himself – improving his offer to Republicans and angering progressives still more, by pursuing a deal – which would be more than a bit embarrassing. But for now, that's a risk the White House is willing to take, hoping that the tactic will pay off electorally in the midterm congressional elections.Of course, the president's compromise strategy carries its own political risks. Obama could end up negotiating with himself – improving his offer to Republicans and angering progressives still more, by pursuing a deal – which would be more than a bit embarrassing. But for now, that's a risk the White House is willing to take, hoping that the tactic will pay off electorally in the midterm congressional elections.
Right now, that seems like a good wager: Republicans are still in disarray, weak and divided. Recall how the president tweaked them in his 31 December 2012 speech, announcing the partial and temporary deal to avert the "fiscal cliff":Right now, that seems like a good wager: Republicans are still in disarray, weak and divided. Recall how the president tweaked them in his 31 December 2012 speech, announcing the partial and temporary deal to avert the "fiscal cliff":
"My preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it … But with this Congress, that was obviously a little too much to hope for at this time.""My preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it … But with this Congress, that was obviously a little too much to hope for at this time."
And that, also, is why the president has thrown himself in the battle to help Democrats win back the House in the 2014 elections. In the past, he has been criticized by congressional Democrats for not backing them strongly enough, especially in the midterm 2010 elections, when Democrats lost control of the House.And that, also, is why the president has thrown himself in the battle to help Democrats win back the House in the 2014 elections. In the past, he has been criticized by congressional Democrats for not backing them strongly enough, especially in the midterm 2010 elections, when Democrats lost control of the House.
Now, the gloves are off. When Boehner warned fellow Republicans that the administration's goal is to "just shove us into the dustbin of history", he may actually have been right. The GOP may have to box smarter to avoid that fate.Now, the gloves are off. When Boehner warned fellow Republicans that the administration's goal is to "just shove us into the dustbin of history", he may actually have been right. The GOP may have to box smarter to avoid that fate.
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