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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Policy-Based Budgeting

There’s an important point that has largely been missed (by myself as well) in the debate over Obama’s approach to the budget. Folks like David Brooks (who did a partial recantation today, but not on the issue I am discussing right now), not to mention the entire Republican Party, have been kvetching that Obama is using the economic crisis to sneak all sorts of big-government, socialist ideas into law, instead of just dealing with the economic crisis in a direct and responsible way. My own response to Brooks argued that you can’t divorce the economy from health care and energy costs, or from efforts to restore the progressivility of the tax code to more or less where it was before George W. Bush went on his upper-end tax cut crusade.
But there’s a bigger point to be made: you can’t “do the budget” without making policy choices. If you try to, by simply tinkering with funding levels for this or that, you are making policy choices in favor of the status quo, which in today’s case often means policy choices made by a Republican president and Congress during the period from 2001-2007.
If you want a precedent for policy-based budgeting, look no further than Republican idol Ronald Reagan, whose famous 1981 budget was loaded with all sorts of ideological freight. As Jonathan Chait pointed out yesterday:

Obama is trying to put his imprint on federal policy. I think he’s right to do so. Ronald Reagan governed the country with little worry about its fiscal health. His goal was tilt the structure of the tax code and federal outlays so that conservatives would have an advantage when the bill came due. It worked: when the Democrats recaptured the White House, they mostly played janitor, cleaning up the Republican mess. Not only did Democrats mosty fail to impose their priorities to anything like the degree Republicans had, voters penalized them in 1994 for imposing fiscal pain. And then, when Republicans regained the presidency, they returned to the Reagan strategy.

Jon’s talking about Reagan’s mega-strategy, but highly significant policy decisions were weaved throughout Reagan’s budget. One very good example, which I happened to see up close as a lobbyist for the State of Georgia, was an effort by Reagan to produce Medicaid savings by “capping” the federal share of costs for that federal-state program. In the administration’s one significant budget defeat, the House substituted a provision that produced the same short-term savings by reducing state Medicaid expenditures. The difference was that Reagan and his budget director, David Stockman did not achieve a permanent shift in the share of Medicaid costs to the states, which was part of a broader effort to ultimately devolve both Medicaid and AFDC (a.k.a., “welfare”) to the states.
The point is simply that you can’t divorce the numbers from the policies that produce them. And totally aside from your assessment of various Obama policies, expecting him to fail to pursue them in the context of a comprehensive budget bill makes no sense.

One comment on “Policy-Based Budgeting

  1. bacaangel on

    The Republicans like to state that Pres. Obama is spending too big, like GWB, only the spending that Pres. Obama is doing is things that have been neglected for far too long and it is spending that will benefit Americans in the present and also in the future — bridges, roads, water and sewer systems, new electric grids and in weatherization, solar panels and wind turbins. This is constructive spending rather than destructive spending characterized by GWB and the Republicans.


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