Obama Budget Critics Are Missing the Mark on Strategy

I suspect the 1995 movie “The American President” was popular not just because of Michael Douglas and Annette Bening but because it spoke to our longing for leadership, for a President who realizes, as President Shepherd does at the film’s climax, that he needs to confront tough issues head-on rather than play it safe.

We miss President Kennedy, who challenged us to reach the moon not, as he put it, because it would be easy but because it would be hard. We long for FDR, who assumed that he could speak intelligently to the American people and, in a 1942 fireside chat, explained the stakes of World War II by referencing places on maps that he had asked Americans to have with them for this conversation.

The notion of presidential leadership is central to this week’s debate about President Obama’s 2012 budget, the Republican response and the next stage of our fiscal discussion. Whether this generation of Americans, facing the prospect of soaring red ink, would rally around a JFK-like presidential challenge or engage in an intelligent national conversation are open questions.

Obama’s critics charge that, with his budget, he chose not to lead but to “punt.” With the nation facing an enormous fiscal challenge, he did not propose anything to address the main factors behind that challenge: the rising costs of Medicare, Medicaid, and, to a much lesser extent, Social Security – due to soaring health care costs and the aging of the population – combined with revenues that will fall far short of covering those costs.

Instead, the President proposed steps that would prove important over the short term, bringing deficits down to three percent of gross domestic product over the next decade and stabilizing the public debt as a share of GDP over that period. He would find the requisite savings largely by freezing domestic discretionary spending, letting President Bush’s tax cuts for those at the top expire on schedule after 2012, and scaling back corporate tax breaks for oil, gas, and other industries.

If things work as the Administration suggests, the drop in deficits and debt will severely reduce the chances of a deficit-driven financial crisis over the next decade, giving the White House and Congress time to address the issues of health and pension costs and revenue levels for the long term.

On one level, I’m sympathetic to the critics. Presidents promise to lead, not duck. They vow to ignore public opinion polls and do what’s right for the country. Nothing threatens the nation’s economic strength, indeed its global leadership, more than a public debt that rises to mindboggling levels if we do nothing about it.

But, the issue is far more complicated than the critics suggest, and their plaints for presidential leadership are rooted as much in myth as reality. The recent past tells us that, when it comes to creating the atmosphere for progress on our long-term challenge, Obama may have the better argument. Let’s take the critics’ complaints one at a time.

First, they say, the president must lead because nothing will happen without presidential leadership.

Well, a year after President Reagan’s huge tax cuts of 1981, he was in no mood to change direction. Senate Republicans, however, were very worried about soaring deficits that the tax cuts had helped to generate. They convinced him to swallow a major tax increase in 1982 that slowed the flow of red ink.

Then in 1995, a Republican Congress crafted a plan to balance the budget over the ensuing seven years. Most of President Clinton’s top aides advised that he ignore the balanced-budget goal and just attack the plan as heartless. He ignored them and followed up with his own balanced budget plan. The two sides eventually came together and collaborated on legislation that helped bring the budget to balance by 1998.

Second, the critics say, the president could have proposed the deficit-cutting plan from the cochairs of his fiscal commission.

That would have been a neat trick. The plan, by former Clinton Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson, claimed nearly $4 trillion in budget savings, but it included a series of plug numbers – “magic asterisks,” as budget cognoscenti like to call them – that provided no details on how to achieve the savings.

Bowles-Simpson, for instance, called for limiting federal spending, reining in health care costs, and reforming the tax code – all without saying how. Were it that easy, of course, we would have done so already.

Third, they say, the president should have proposed new ways to save money – beyond what he has previously proposed – to build momentum for the effort.

That defies logic. When policymakers try to save money, they look first for the “low-hanging fruit” – the proposals that will attract the least political opposition. Only when they exhaust those measures do they move to the more politically challenging ones.

Presidents do the same in their budgets. In his 2012 budget, Obama included some proposals from his 2011 budget that died on Capitol Hill. They include the end of the upper-income Bush tax cuts, the curtailing of corporate tax breaks, and a cap on the value of itemized deductions at 28 percent.

Critics complain that Congress has rejected these proposals and that Obama should offer others. Fine, but the choices get tougher, not easier.

Had he proposed to end the Bush tax cuts for middle-income Americans or eliminate the mortgage interest deduction or reform Social Security by raising the so-called retirement age, those proposals would have generated even more controversy than the Obama proposals that lawmakers have already rejected.

By not proposing such items, Obama’s backers say, they remain available for a future bipartisan agreement to address the long-term fiscal challenge. After negotiations to reach such a deal, everyone can express their unhappiness about the provisions (perhaps even blame one another for them) while voting for the deal.

So, yes, presidents should lead. But presidents also should get things done. This may be the best way to do so.

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