BELATED BUDGET

04.10.13

Obama Budget Catching Hell From Both Sides: Why That’s a Good Sign

Liberals are howling ‘sellout’ over Social Security reform, and Republicans are readying their reflexive ‘tax and spend liberal’ attacks. That’s how you know Obama’s budget is a good one, says John Avlon.

“Blessed are the peacemakers, for they shall catch hell from both sides.”

So said a sign on the Justice Department wall of Burke Marshall at the height of the civil rights era. But it could also apply to President Obama’s new budget, finally offered up two months late and on the heels of competing Democratic Senate and House Republican proposals.

But this budget is not like all the others. It is not a positional bargaining document, designed simply to rally the base at the outset of negotiations. One way you can tell is that liberal activists and congressmen are already screaming “sellout” at the White House for offering Social Security reform as part of a balanced plan to reduce the deficit and debt.

The Republican response so far has been crickets, and that throat clearing you hear in the distance might just be a recalibration before another reflexive “tax and spend liberal” attack on the president.

But resorting to the same old bumper sticker is going to strain credulity when the president is catching hell from real socialists like Sen. Bernie Sanders, who declared that “I am terribly disappointed and will do everything in my power to block President Obama’s proposal to cut benefits for Social Security recipients.”

“The first sign it’s a good plan or at least a step in the right direction is that Obama is getting hell from both sides,” says former Bush and McCain strategist Mark McKinnon, a fellow Daily Beast columnist and No Labels co-founder. “If they’re not barking, then the proposal has no teeth and ain’t biting.”

By offering entitlement reform through the cost-of-living formula adjustment for future retirees sonorously known as “Chained CPI,” saving almost $125 billion over the next decade while exempting the most elderly and impoverished seniors, the White House is formalizing offers made in negotiations with House Speaker John Boehner in the past, putting them down in the black-and-white of the proposed budget.

If Republicans are serious about reducing long-term deficits and debt, they should treat this proposal as a significant step in the right direction, worthy of their own concessions.

In total, the Obama budget offers an additional $1.8 trillion in deficit reduction over the next decade, bringing the White House’s self-scored tally of deficit reduction to more than $4 trillion over the decade. That falls well short of the Republicans’ post-election call for a balanced budget in 10 years. But the presence of a Democratic president proposing serious entitlement reform is significant and should represent a step toward a grand bargain if Republicans are serious that deficits and debt represent an existential threat.

For a long time, conservative congressional talking points have focused on the claim that Obama only offers tax increases when faced with the sequester and other opportunities for a grand bargain. Simultaneously, Senate Minority Leader Mitch McConnell mused that a grand bargain to “save the country” would be possible only if the president offered up entitlement reforms like “altering how inflation is calculated to reduce cost-of-living adjustments to Social Security recipients,” according to a paraphrase of remarks McConnell gave to a Kentucky Chamber of Commerce audience last month, recounted by Politico’s Manu Raju.

Happily, that has now occurred. So we can all march toward a grand bargain now, right?

Obviously, it isn’t going to be that easy. Republicans can gripe that past talk about increased means testing for Medicare isn’t included in the Obama budget proposal (though increased payroll taxes for the wealthy is included). And proposals designed to delight liberals, like a $9 minimum wage or paying for more free pre-K programs in the states through higher cigarette taxes, aren’t going to send the Chamber of Commerce into the arms of the administration. The president is proposing an additional $50 billion in infrastructure spending to help spur economic growth.

But with this budget, we are finally seeing substantive outreach on entitlement reform as part of a balanced plan. It cannot be wisely ignored.

Moreover, there are other areas of substantive policy overlap, such as the Obama administration’s call for “Making the Tax Code More Simple and Fair.” His vision of simplification doesn’t dovetail with Paul Ryan’s, but at least there is agreement on reexamining the tax expenditure breaks that cost the government $1 trillion a year and a specific proposal on how to limit deductions (excluding charitable giving) to 28 percent. There are also cuts proposed to federal farm subsidies and federal retiree benefits along with some 215 specific items recommended for reductions in the Obama budget. And while some corporate tax loopholes are targeted for closure, the R&D tax credit is stabilized in the name of encouraging business innovation.

So while agreement is not a given, there are objectively many points of overlap—which, in a rational world, would be the basis for negotiation and agreement.

But liberal Democrats are getting ready to mount the barricades over Obama’s alleged betrayal on Social Security. That should offer credibility to the president’s claim to be reaching out to the center. “In a panicky reaction to President Obama’s budget, some liberal groups are trying to chain Democrats to a Norquist-style pledge to defend the status quo on entitlements,” says Will Marshall of the Progressive Policy Institute. “It’s dumber than dumb, but at least it shows the country that Obama is trying to rally the center against the enemies of compromise on both sides.”

The Obama administration cautions that its concessions on entitlement reform are contingent on increased revenue from the tax expenditure, deduction, and loophole closures—but that itself can be seen as a sign that some form of tax simplification is still achievable in this Congress.

Plenty of voices from either side will see only political machinations rather than sincere outreach in this Obama budget. But, however belated, the budget provides indelible evidence about a desire to match the president’s occasional rhetoric of entitlement reform with reality. And if Republicans are serious about reducing long-term deficits and debt, they should treat this proposal as a significant step in the right direction, worthy of their own concessions.

Combined with comprehensive immigration reform, members of this Congress just might be able to say that they left the country in better shape than they found it—if, and only if, they are willing finally to take on their respective special interests and govern in the national interest. They might find that good policy makes good politics.