On Monday in Maryland, President Obama announced his new budget in an empty classroom, with a globe, a microscope and a stack of books strategically placed on the teacher’s desk behind him. “We’re going to have to get serious about cutting back on those things that would be nice to have but we can do with out,” he said, in the language of a fiscal hawk. “That’s how we are going to get our fiscal house in order.”
At a Tuesday press conference, he made clear just how limited his ambitions actually are. “We’re not going to be running up the credit card anymore,” he said, citing questionable projections that show deficits no bigger than the growth in the economy starting in 2015. But upon repeated questioning, he offered no road map for actually bringing down the outstanding balance of debt, which will top $15.47 trillion later this year, exceeding the size of the U.S. economy for the first time since 1947.
On that score, he told the press and the American public to wait and see what happens next as he begins discussions behind closed doors with members of Congress. “Let’s face it, you guys are pretty impatient,” he said, in response to one question about the uncertain road forward. “If something doesn’t happen today, then the assumption is it’s just not going to happen, all right?”
He said he planned to open negotiations, though he did not lay out a framework. He pointed to the success he had last year in negotiating a tax cut compromise as a sign that a deal could be reached through similar backroom negotiations. “Just as a lot of people were skeptical about us being able to deal with the tax cuts that we did in December, but we ended up getting it done, I’m confident that we can get this done as well,” he said.
What he didn’t say is that the December compromise followed a tried and true formula of Washington deal making. In a contest that pitted competing interests, both sides got paid off. Republicans won a tax break for wealthy Americans, while Democrats won continued tax breaks for middle class Americans. Faced with a choice, both sides ate the cake. The loser was the national debt, which will increase to record levels to finance the compromise.
By definition, a serious approach to deficit reduction would have only bigger losers and lesser losers. Deficit reduction is about taking away the cake–increasing taxes or decreasing spending. Any compromise, unlike the December deal, would by necessity be painful, and the most obvious fixes would target the most powerful interest groups in Washington–including oil companies and retirees. President Obama’s strategy for approaching this conundrum remains as shrouded in secrecy as the strategy of Republican leaders.
In the meantime, Obama’s own projections of budget stability in the out-years is almost certain to not come to pass as envisioned. He has baked in a number of expected tax increases–for oil companies, mortgage interest and charitable donations–that have slim support in Congress and powerful interest groups in opposition. Obama said he was optimistic that proposals that has been shot down in the past will be adopted. “I think what’s different is everybody says now that they’re really serious about the deficit,” he said. He has sounded optimistic notes like this in the past as well.
“What we’ve done is to try to take this in stages,” Obama continued. “What we say in our budget is let’s get control of our discretionary budget to make sure that whatever it is that we’re spending on an annual basis, we’re also taking in a similar amount. That’s step number one. Step number two is going to make — is going to be how do we make sure that we’re taking on these long-term drivers, and how do we start whittling down the debt?”
As it now stands, step number one seems to involve a great deal of wishful thinking and optimistic math. And there is no clear plan for how or when to proceed with step number two.
On Monday in Maryland, the president said he wanted the federal government to behave more like a regular family. “That’s what families across the country do every day–they live within their means and invest in their family’s future,” Obama said. “And it’s time we do the same thing as a country.”
It was a nice thought, using rhetoric that tests well among focus groups. But President Obama has still not presented a plan for how to make it happen. Nor, for that matter, have Republican leaders. By all appearances, the song remains the same.
