Obama's Savvy Deficit Play Helps Him in 2012 but Will Hurt Democratic Party

The president is off selling his new economic message after shocking liberals with a strong rhetorical budget speech. But he's still playing in Republican territory, warns Eric Alterman—a strategy that could save him in 2012 but doom his party.

Barack Obama took to the road this week, traveling westward to sell his new economic message and, unofficially, begin his 2012 re-election campaign. From a political standpoint, it’s a smart play. Obama delivered the single best defense of his presidency last week and his first genuinely coherent philosophical statement as president about where he wants to take this country as president—and, no less important, where he doesn’t.

Obama’s rhetoric on the debt issue was surprisingly strong. He spoke “powerful words, and spoke them with real feeling,” as veteran ex-speechwriter/bleeding-heart liberal Rick Hertzberg wrote. Obama did not, as many of us feared (and expected), take refuge in the “We must reject both extremes” meme, forgetting, as he so frequently does, that one of those “extremes” is not only not terribly extreme, but also goes by the name of “your base,” sir. No, the speech was not the kick in the teeth, that Pavlov-like, liberals have been trained to anticipate from this president. But this was due in part to the success of the far right in moving the political goals so far into their territory that merely to take what not long ago would have been an Eisenhower-Republican style position is now labeled “ liberal class war”; the first step on the road to socialist totalitarianism.

Thanks to Paul Ryan, Obama was given a clear target that allowed him to define, for once, his team, rather than play referee. As The New Republic’s Jonathan Cohn writes, to support the Ryan budget, one must also support:

(a) denying health insurance to more than 30 million people; (b) raising the Medicare eligibility age and transforming the program into a voucher scheme, thereby leaving millions of seniors struggling to pay their medical bills; (c) terminating the federal government's open-ended commitment to Medicaid, thereby forcing states to cut back on enrollment, benefits, or (more likely) both; (d) enacting yet another huge new tax cut for the extremely wealthy.

So long as Obama keeps playing small ball on a field of dreams imagined almost entirely on the drawing boards of Republican funders and consultants, he will be a great deal more beatable than he currently looks.

Moreover, as David Mind pointed out, the Ryan budget also would gut the financial system’s new regulatory structure, inviting yet another bailout crisis sooner rather than later. And while more than a few liberals were among those who felt compelled to praise the “ brave, radical, and smart” gutting of the welfare state that Ryan proposed, Obama is at least enough of a strategist to know that he had better not look this gift horse too closely in the mouth.

Foil in hand, Obama gave his supporters the rhetoric they craved but stopped well short when it came to substance. First off, while wielding his own scalpel on government spending, he barely nodded in the direction of the greatest concentration of waste, inefficiency, and outdated assumptions: the Pentagon. Moreover he had many kind words for the Simpson-Bowles commission report, which—while tougher on the Pentagon than the Democratic president was—argues for a 2-to-1 split in favor of budget cuts over new tax revenues. This is despite the 15 percent of GDP in taxes collected last year being the lowest level we have seen 61 years, fully 20 percent lower as a percentage of GNP than it was during the Reagan years. What’s more, the average federal income tax rate on America’s super-rich was down to 17 percent last year, down from 26 percent in 1992; this comes as the share of America’s wealth of the richest 1 percent has risen from 8 percent in the 1960s to more than 20 percent in 2011, with wages for the average worker remaining flat during that period. Is it any wonder that the liberal Nobel laureate Joseph Stiglitz—the kind of economist Obama passed up to hire the likes of Larry Summers or Tim Geithner— called the plan an economic “suicide pact” that would cost the economy millions of jobs?

The biggest problem with Obama’s embrace of the conservative (but not crazy conservative) center—beneath the liberal rhetorical crumbs—is that it is going to deliver conservative policies. Unemployment will stay near its historic high as the stimulus fades—a stimulus that even Larry Summers now admits was insufficiently audacious, but was embraced because, right from the start, when faced with unified Republican opposition, Obama chose to switch rather than fight.

Not only are all these cynical compromises counterproductive in policy terms, they leave Democrats with little or nothing to cheer for. Why, if bipartisanship was to remain his mantra, didn’t Obama go with the no less bipartisan panel co-chaired by former Senate Budget Committee Chairman Pete Domenici and former Clinton White House Budget Office and CBO director Alice Rivlin, and their 50/50 split on spending cuts and new tax revenue? It’s not as if conservatives were going to go any easier on him, no matter what he said or did. (Cue Peggy Noonan: “The speech was intellectually incoherent. An administration that spent two years saying, essentially, that high spending is good is suddenly insisting high spending is catastrophic. The president appealed for bipartisan efforts, but his manner and approach leave his appeals sounding like diktats.”

Conventional wisdom has Obama as the likely winner against whoever emerges from the field of weak and nutty candidates now swarming around Iowa and New Hampshire, with the Democrats likely losing the Senate and looking more and more like the New York Mets in the House. But Noonan is right about one thing. So long as Obama keeps playing small ball on a field of dreams imagined almost entirely on the drawing boards of Republican funders and consultants, he will be a great deal more beatable than he currently looks. Check with Bill Galston you don’t believe me. As nutty as the Republicans may be, they will be backed by unprecedented amounts of cash, thanks to the U.S. Supreme Court and Citizens United, and can expect a terrific turnout level from their base—much of whom stayed at home in 2008, disappointed with the incompetence of the Bush administration. The Obama administration’s campaign slogan appears to be more and more “look how crazy those guys are.” (For this reason, they should be leaking favorable stories on a daily basis to the national media about Sarah Palin, Michele Bachmann, Newt Gingrich, and the latest front-runner, Carrot Top.

If not, well then, fasten your seat belts, people. It’s going to be a bumpy ride.

Eric Alterman is a Distinguished Professor of English and journalism at Brooklyn College and the CUNY Graduate School of Journalism, a senior fellow of the Center for American Progress and media columnist for The Nation. His most recent book is Kabuki Democracy: The System vs. Barack Obama.