Obama's chance to get back in the game

If the President really is to rebut House Republican budget chairman Paul Ryan’s plan, he’s going to have to say something completely new in today’s speech. He’s going to have to say that reducing the deficit is as important as creating jobs, but that there’s not necessarily a tradeoff. And he’ll have to reassure his liberal base (what’s left of it?) that the way you avoid that tradeoff is to take the polar opposite strategy of Ryan–which is not to not reduce the deficit (which, I’m sorry, “fearmonger” that I am, really will ultimately hurt all of us, rich or poor), but to reduce the deficit through better tax policy. (Example: a Brookings paper I wrote on just such an approach over four years ago which reads amazingly like it was written yesterday.) The President can’t go on merely empathizing with his liberal base by complaining about the heartless, clueless Republican approach to deficit reduction, which is to drastically slash government spending programs in favor of tax cuts all the time for any reason, while at the same time basically embracing the bulk of the Republicans’ tax-cutting approach. (The extension of the Bush/Obama tax cuts still accounts for more than 100 percent of the cost of the President’s budget proposals.) Huh?

Ruth Marcus has also been puzzling over the President’s strategy on the deficit issue; in today’s Washington Post she tries on a sports analogy (emphasis added):

I’m no sports nut but I’ve spent enough time at kids’ soccer games to understand that it’s impossible to score if you’re playing on the wrong side of the field.

Which is why I have found the White House strategy for dealing with Republicans on the deficit so befuddling…

The fight over spending this fiscal year is a case in point. The prospect of a Republican takeover of the House was evident well before the election. The inevitable result was going to be more draconian cuts than would have been required if the spending bills were passed beforehand.

In the aftermath of the Democrats’ losses, the entire debate played out in terms they were destined to lose. If the argument is framed solely in terms of budget cuts, Republicans always win: They are willing to out-cut Democrats. That inescapable tilt was exacerbated by the virtual absence of a White House message about the impact of a shutdown or the cuts themselves…

A second, maddening example of the White House allowing the other side to frame the debate involves the longer-term fiscal picture. The president convened a commission on the topic and then abandoned it. First, he did not lift a finger to help his co-chairs, Erskine Bowles and Alan Simpson, assemble the 14 votes necessary to get the commission’s plan a congressional vote. Then, when the plan was released, the president pointedly declined to express a view. He stuck to the vagueness strategy in his State of the Union address and his 2012 budget proposal.

In the meantime, the void was filled — and the playing field was shifted even further rightward — by House Budget Committee Chairman Paul Ryan. The Wisconsin Republican unveiled a plan that makes the centrist Simpson-Bowles proposal look as if it were written by Nancy Pelosi and Howard Dean.

If the White House had weighed in on Simpson-Bowles before Ryan released his plan, it could have staked out an argument that the framework — a combination of spending cuts and tax increases — was correct but that some specifics (the precise mix of the two, the details of the Social Security fix) went too far in the conservative direction. Now the “reasonable” compromise would [seem to] be between Simpson-Bowles on the leftward side and Ryan on the right…

[T]he administration [has been insisting that] coming forward with a plan of its own would be counterproductive. The history of budget deals, officials argued, was that public presidential proposals get shot down (George W. Bush on Social Security in 2005, for example); successful outcomes are crafted behind the scenes.

Indeed, this was happening in the form of the so-called Gang of Six, the bipartisan group of senators working to write the Simpson-Bowles framework into law. Just as the gang was nearing agreement, the Ryan plan came along, and the White House, rattled by its reception, decided it needed to get into the game…

[But] if the White House was going to support the Simpson-Bowles framework all along, why not do it earlier and take advantage of the momentum?

Back to the sports metaphor, it makes you wonder: Can’t anybody here play this game?

Ruth seems to suggest the President has just accidentally stumbled onto the “wrong side of the field” (that would be the conservatives’ side), but I don’t think that’s so accidental after all. If he intended to play at all for the “other team” (that would be the liberals), he wouldn’t keep intentionally passing the then-Bush-now-Obama-tax-cuts ball to the conservatives. If the President intended to play on the liberals’ team (for at least part of the time anyway), he’d launch a strong offense that would propose a deficit-reduction plan based largely (mostly?) on raising revenue by reducing tax expenditures (a la Simpson-Bowles, although I’d suggest it would then be more “a la Bowles-Simpson”), and he would go further on the revenue-leaning side in order to provide a more adequate counter to the Ryan plan (which is all spending-side cuts). The President would say: hey, Ryan’s approach to reduce the deficit would virtually eliminate government programs outside of the entitlement programs–hey, that’s crazy! And he’d push back with his own approach to reduce the deficit by broadening the tax base and allowing revenues to rise as a share of our economy to levels even above the Bowles-Simpson ceiling of 21 percent, while explaining that he doesn’t like that ceiling because the “right” level of revenues has nothing to do with historical averages or any other arbitrary target but instead with what’s needed to adequately finance the government spending we as a society desire and deem “worth it.” (And the “right” size of government is the size we desire even when we have to fully pay for it–and by the way, isn’t necessarily properly measured by spending or revenues as a share of GDP!)

In my wildest fantasies, in his speech today the President would make these declarations about embracing the fiscal commission’s general tax reform strategy, underscoring the point by adding that “you know, let’s face it, the Bush tax cuts sucked, and I’m finally going to replace them with something better.” (Or something like that.)

But somehow I don’t think we’ve come any farther with the President on tax policy than a year ago (i.e., before the President got any ideas from his commission) when I wrote this open letter to him, concluding with:

I know you made an unfortunate campaign promise on tax policy that you feel bound to–to not raise taxes on any households with income under $250,000. But isn’t it more important to keep your greater (at least implicit) promise to the American people on keeping our economy strong, putting us on a better path (”changing” course), and leaving the nation in decent shape for our kids? You can’t keep both promises, and to me as an economist and as a mom–and I hope to you as our leader and a dad–it’s obvious which one you should abandon.

Happy Tax Day!

Mr. President, please pleasantly surprise me today! Seize control of that ball and start charging in the right direction! (And yes, I know you play the “court” more than the “field” Ruth was talking about.)

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