Tuesday, April 12, 2011

Obama's Budgetary Poker

Word has it that Obama’s speech on the deficit Wednesday will associate him with the bipartisan effort in the Senate to turn the Bowles-Simpson plan into legislation. As far as a lot of liberal economists are concerned, that’s bad news on the merits. (See, for example, what Paul Krugman has to say here.) In any case, if it happens it will certainly represent a spectacular fiscal retreat on Obama’s part. Negotiations between the parties haven’t even started, yet he’d be unilaterally taking the more liberal budget he proposed less than two months ago off the table.

That has a lot of liberals shaking their heads over how badly Obama is playing the political hand he was dealt when Bowles-Simpson was unveiled shortly after the last election. Here, for example, is Ezra Klein:
“But if the president was actually interested in passing Simpson-Bowles, this was a bit of an odd way to go about it. Leaving it out of his budget and State of the Union speeches meant it didn’t become the central issue on the table. That gave Ryan room to make his proposal, and the early signs are that his proposal has turned many Republicans against Simpson-Bowles, as they’d prefer Ryan’s plan and don’t want to weaken their negotiation position. If the process then becomes a compromise between a centrist plan like Simpson-Bowles and a hardline conservative plan like Ryan’s, that’s not going to produce something Democrats are happy with, and Obama will be blamed for not taking the initiative and forcing everyone to simply consider Simpson-Bowles when he had a chance.”
Let’s give Obama a little credit. How likely is he to be unaware that, as a general rule, it’s a bad idea to negotiate with yourself before you get around to negotiating with a determined counterparty? If Obama’s budget was the opening bet in a hand of budgetary poker, then his decision to fold as soon as Republicans saw and raised him can only be explained by his changing his mind about the strength of his cards.  But what new information could have made Obama suddenly think he's playing a weaker hand?

I suppose it’s possible that he has changed his mind about public opinion. Perhaps he was surprised at the audacity of the Ryan budget and now fears that it’s going to be a lot more popular than he thought the Republican negotiating position would be. But that’s unlikely on its face.  It’s surely far too early for a critical mass of likely voters to understand what’s in the Ryan budget and to have decided what they think about Republicans for endorsing it. For the little it’s worth, my unprofessional take on public opinion is that, even if it's moving
haltingly in the Republicans' direction (and I've seen no evidence that it is), Ryan still has to be far out in front of it.

So what other new information could have changed Obama’s mind? I can think of only one plausible possibility. Obama’s presidential modus operandi is to cast himself in the role of the sober-minded mediator who brings otherwise unyielding political contestants together. Suppose he took the temperature of the Democratic caucus in the Senate in the course of the just-completed negotiation over the continuing resolution and found that it’s a lot less devoted to liberal spending and taxing priorities than he’d once supposed.

That would mean that standing behind his original budget would leave Obama on the left flank of the budgetary debate, going toe-to-toe with Ryan and John Boehner. And that would cast Harry Reid as the agent of sobriety in the coming budgetary drama. That’s not only a role that Reid is spectacularly unequipped to play, it’s one that Obama seems psychologically unable to relinquish. So his only recourse would be to stake out a position that’s too vague to back him into corner down the road, but sounds like it’s to the right a critical mass of Democratic Senators.


Anonymous said...

You give Obama way too much credit. To continue your game-playing theme, Obama is playing checkers and the Republicans are playing chess.

Dave said...

Anon @2:03 -- By my interpretation, Ron isn't giving Obama the kind of credit anybody would actually want to get. Instead, he's "crediting" Obama with being either cunningly self-serving, or helplessly egotistical -- or some combination. Either way, he's making it hard to be a Senate Democrat. (Not to put words in Ron's mouth -- that's just my interpretation.)

Ron -- It's interesting that your guess is that public opinion hasn't moved toward the Republican position (on spending reduction), yet you also hypothesize that the Senate Democrats *are* moving toward the Republican position (not all the way, of course). Hard to imagine one happening without the other. Personally, I hope you're right that Senate Democrats are "less devoted to liberal taxing and spending priorities". To me, the growing national debt absolutely dwarfs every other policy concern, and the problem can't begin to be resolved unless the Democrats engage.

Ron Replogle said...

Point taken. I just don't think that there could have been much movement in public opinion about budgetary issues since Obama handed down his budget in February. If Reid doesn't have the votes to pass anything like that budget, it will probably be because of the defection of Democrats from red or purple states like Claire McCaskill, Ben Nelson and John Tester who got the voter's message about spending loud and clear last November. My guess is Obama and Reid caved on the continuing resolution because they found out they couldn't rely on their votes even on that.