To understand the thinking behind President Obama's budget proposal this morning, one must view it in the context of the criticisms liberals have leveled at him througout his administration.
From the get go, liberals have criticized Obama for going too far out of his way to compromise with Republicans. They thought the stimulus was too small and had too many tax cuts relative to the direct government spending. They thought he should have fought harder for a government-run plan, or public option, during the health care debate. They were incensed when he agreed to extend all the Bush tax cuts, and that anger only grew as he signed two deficit reduction deals with Republicans that did not raise taxes, first to avert the government shutdown, then to raise the debt ceiling. They thought the focus on deficits during a bad economy is fighting on GOP turf, and reducing the prospects for a recovery. And they worried that he was willing to tinker with entitlement programs -- Medicare, Medicaid and Social Security. The constant theme in the complaints is that Obama is negotiating against himself -- that Republicans will never work with him anyway, so he may as well be pushing progressive policies. They want a more combative Obama.
With the release of his jobs plan earlier this month and today's deficit reduction proposal, Obama has shown that he's taken the liberal criticisms to heart. He's rejected any genuine attempt to try to work with Republicans. His combined plan introduces more stimulus, rejects calls for short-term deficit reduction, and and pays for everything over time with tax hikes and modest spending cuts. On top of this, he proposals no real reform to entitlement programs.
His jobs bill, according to his own estimates, will increase deficits by about $447 billion. We'll have a chance to get into the details of the new budget plan in subsequent posts, but here's how he tries to claim $4.4 trillion in deficit reduction. First, he includes in his plan the $1.2 trillion in discresionary cuts that already passed in the debt ceiling compromise, plus another $1.1 trillion in phony war savings from winding down the wars in Iraq and Afghanistan -- both of these policies would happen regardless of whether or not his new plan is adopted. So what we're actually left with is $577 billion in savings on mandatory spending, $436 billion in reduced interest payments and $1.6 trillion in tax hikes.
During the debt ceiling talks, there was a lot of talk about Obama proposing three or four dollars of spending cuts for every dollar of tax hikes (of course, details of the supposed offer were never made public beyond leaks to some media outlets). But with today's plan, Obama is proposing the opposite -- 2.7 dollars in tax hikes for every dollar in proposed spending cuts.
If Obama has decided he's through dealing with Republicans and wants to run for reelection with a populist, class warfare, message, that's understandable. But let's just call it like it is: he's a liberal Democratic president catering to his liberal base. If Obama wants to propose a plan that hikes taxes by $1.6 trillion, he can't portray himself as trying to compromise with Republicans, nor can he credibly argue that he wants both parties to set aside political games for the good of the country.