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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Obama’s Big Budget Chip

With all the skirmishing over non-defense discretionary spending in the fight over FY 2011 appropriations, it’s easy to forget the bigger budgetary picture that will soon get attention if and when House Republicans release their own long-term budget document in the context of next year’s budget resolution.
For all sorts of fairly obvious reasons, Republicans desperately want Obama to agree at least in principle to reduce future spending on Social Security and Medicare before they formally move in this direction, which their own budgetary arithmetic makes absolutely necessary. GOPers certainly don’t want to make their House members vote for a budget resolution that includes such political risks as partial privatization of Social Security and voucherization of Medicare without bipartisan “cover,” exposing them to sustained attacks from Democrats going into the 2012 elections.
And while Obama, like Bill Clinton before him, has been perfectly willing to hint very generally at potential support for “entitlement reform” to reduce long-range deficit and debt projections, he’s not about to go further unless Republicans abandon their theological opposition to higher revenues (an important part of “Social Security reform” in and of itself, aside from their importance in moving the budget towards balance).
Now a few Republicans–notably Sen. Tom Coburn–have expressed a willingness to consider more revenues if they don’t involve higher general tax rates, as part of a larger deal that includes “entitlement reform.” That was the proposition laid out by last year’s deficit commission report, which Coburn endorsed even as the House Republican commission members voted “no.” And the idea of some sort of “base-broadening” revenue measures that keep or even reduce current tax rates is probably the basis of the support of 32 Republican senators for the bipartisan letter to Obama urging him to lead deficit reduction negotiations that’s in the news this week.
As TPM’s Brian Beutler explains, there are genuine divisions in the White House (and undoubtedly among congressional Democrats as well) about when if ever Obama should be willing to play his big budget chip of contemplating significant changes in Social Security and/or Medicare. But there’s no disagreement at all that Republicans are going to have to offer a lot more than they’ve been willing to offer up until now on the revenue side, and perhaps in the parallel discussions of appropriations. Here’s Beutler on what either the House GOP budget proposal or any bipartisan Senate budget proposal would have to involve:

[I]f their efforts are serious, Obama’s economic team sees an opening — to take pressure off the non-defense discretionary portion of the budget, and to send a signal to markets that the U.S. government isn’t so paralyzed that it can’t address larger, looming fiscal challenges.
So what constitutes a serious effort? Basically a recognition that Social Security revenues and general revenues have to rise, if the administration is going to accept anything that cuts benefits, even modestly.

Despite the fears of many progressives that Democrats will once again “cave,” there appears to be no serious risk that Obama will move on entitlements until Republicans have already moved on revenues. If they don’t, then GOPers will face the painful choice of moving forward on entitlements on their own, or giving up on their much-boasted deficit reduction efforts. With the public generally favoring tax increases on the wealthy as part of an overall deficit reduction package, even as Tea Party folk demand deep entitlement cuts and oppose revenue measures, Republicans will not be in a very good position.
All of these conflicts will play out, of course, in the context of a short-term crisis over appropriations and the debt limit, so GOPers will not have much time to weigh options or influence public opinion, either within their own ranks or with the public at large. So we really are likely to see some high-stakes poker playing during the next two or three weeks.

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