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Obama Budget Signals Shift From Austerity Measures To Campaign Promises

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WASHINGTON -- President Barack Obama's Fiscal Year 2013 budget isn't inherently unique or surprising. It sticks to the same objectives that the White House has pursued for months: short-term investments in job growth, combined with a mix of long-term spending cuts and revenue raisers to achieve a decent amount of deficit reduction.

Yet many have responded to the proposal with a great deal of alarm. The reaction has been decidedly political on both sides, with the White House making a major bet that the country is tired of austerity measures and Republicans jumping to brand the president as a paradigm of fiscal irresponsibility.

"The President’s goal isn’t to solve our problems, but to ignore them for another year," said Senate Minority Leader Mitch McConnell (R-Ky.), in what was one of many harshly critical Republican responses. "If anybody wants to know what a failure of leadership looks like, this is it."

The administration, naturally, sees things a bit differently.

Formally introduced on Monday, the budget includes $3.8 trillion in new spending and seeks to achieve $4 trillion in deficit reduction over the next decade, laying bare the fault lines that will divide the two parties from now till election day. The White House is calling for $1.5 trillion in tax increases to help compensate for investments elsewhere. This includes letting the Bush-era tax cuts on top earners expire, closing loopholes enjoyed by prosperous industries, and reverting the rates on capital dividends back to those charged on ordinary income (with exemptions for lower earners).

For every dollar raised through these mechanisms, the budget cuts $2.50 in spending, including $360 billion in savings from Medicare and Medicaid and reductions in operating budgets for the Labor Department, Justice Department, NASA (a $59 million reduction) and the military (a $5 billion reduction). The president seeks a more gradual reduction of debt as a ratio of GDP than House Republicans. And his top advisers continue to insist that any real talk of entitlement reform has to come through both sides making tough sacrifices.

"Let's see if we ever see a budget coming from the Republican leadership, either in the Senate or the House, or even a framework that has that type of balance," said Gene Sperling, a top economic adviser to the Obama administration, when asked at a budget briefing if a "grand bargain" of the sort envisioned during the debt ceiling fight was now dead.

If the budget sounds familiar, it should. Save slight alterations -- most notably to the dividends tax policy -- this is the proposal Obama has been championing for some time now.

What distinguishes this plan from those of years past is not its content. It's the stance that the president is taking. The deficit hawk-lite approach that he took as recently as this past fall is no more. In its place, the administration is casting itself as the shepherds of a slow but steady economic recovery.

"I think that there's pretty broad agreement that the time for austerity is not today," White House Chief of Staff Jack Lew firmly declared during an appearance on "Meet the Press" Sunday.

The proof is in the executive summary blueprint distributed to reporters during that Monday briefing. Rather than leading with the $4 trillion in deficit reduction measures, the White House chose a different approach. "We now face a make-or-break moment for the middle class and those trying to reach it," read the document's first sentence. "[It] is time to construct an economy that is built to last."

To that end, the administration highlighted the $350 billion in "short-term" measures of job growth, including $50 billion for surface transportation projects, $30 billion for school construction, $30 billion for teacher retention, $140 billion for research and development in the manufacturing sector and $30.7 billion for biomedical research, among others.

If that wasn't enough of an indication of how the White House plans to sell its budget, another came during the briefing itself. Top administration officials twice pointed to Europe, not as evidence of what happens when government spending goes awry, but what transpires if austerity cuts too deep.

"I think what Jack [Lew] is saying and I think what Chairman Bernanke was saying recently and what we are seeing a bad example of in the UK, is that if you seek to contract spending and raise revenues when the economy is still getting back on its feet, that type of austerity in the short term, when your economy is still pulling back from a deep recovery can be counterproductive," said Sperling.

The FY2013 budget, in short, caps off what one administration aide called a rhetorical shift that's been in the works for months. In the immediate aftermath of the 2010 congressional elections, the president calculated that he had to win the public's trust on deficit reduction in order to have any hope for other legislative achievements. What resulted was nine months of largely futile negotiations with House Republicans over the size and composition of cuts, culminating in a disastrous debt ceiling standoff.

Since then, the White House has worked feverishly to change the narrative. That began with the American Jobs Act, laid out in the president's speech in Kansas, hammered home in the State of the Union address, and now enumerated in the budget proposal. That this shift came during the buildup to the campaign season is no coincidence. Though criticism of the budget as political is a political act in itself, it is clear that these themes are now the defining pitch of the Democratic Party heading into the election.

Around the Web

The President's Budget for Fiscal Year 2013 | The White House

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