Obama's Deficit Dilemma
President Obama was backstage at an auditorium at George Washington University last April preparing to give a major speech, when William M. Daley, then his chief of staff, spied an unexpected guest in the audience: Representative Paul D. Ryan, the Republican chairman of the House Budget Committee, whose budget plan Mr. Obama was about to shred.
“Try to tell the president!” Mr. Daley directed an aide.
It was too late to deliver a warning. Mr. Obama went on stage and outlined his proposal to reduce deficits — but not before he flayed the Ryan plan, saying its deep tax cuts and deeper spending reductions would harm students, seniors, the disabled and the nation.
“It’s not going to happen as long as I’m president,” Mr. Obama vowed.
Ten months later, the attack that left Mr. Ryan fuming in the front row is better remembered than the ideas Mr. Obamapresented that day, administration supporters lament.
It came just a few months after the president had opted not to endorse the recommendations of a deficit commission he had created in hopes of brokering a bold, bipartisan deficit deal. That gave rise to a portrayal that has stuck, popularized by Republicans, pundits and some Democrats: that the president, out of political timidity, snubbed his own panel’s plan.
Mitt Romney, a Republican presidential candidate, recently charged that Mr. Obama “simply brushed aside” the plan by the so-called Bowles-Simpson commission (named after its two chairmen) — even though he and most Republicans reject it for its proposed tax increases. Warren E. Buffett, an Obama ally, has said ignoring the plan was “a travesty.” Former Representative John M. Spratt Jr., a Democrat on the commission, said the administration had had an opportunity “to stand up and be counted, and for the most part they weren’t there.”
Yet starting with that April speech, Mr. Obama has come to adopt most of the major tenets supported by a majority of the commission’s members, though his proposals do not go as far. He has called for cutting deficits more than $4 trillion over 10 years by shaving all spending, including for the military, Medicare and Social Security; overhauling the tax code to raise revenues and lower rates; and writing rules to lock in savings.
But he did so months after the commission’s report in December 2010, and largely without acknowledging that he was borrowing from its recommendations. That caution reflected White House concerns about liberals’ hostility to the plan and, aides say, Mr. Obama’s certainty that Republicans would reject anything he endorsed.
The story of how Mr. Obama dealt with Bowles-Simpson illuminates his struggles with the deficit politics that have curbed his ambitions and forced him to confront the limits of his persuasive powers. Faced with an even more intransigent opposition after Republicans captured the House in the 2010 elections, Mr. Obama made a tactical retreat, suppressing his instincts to “go big” in favor of a go-slow approach.
He settled into trench warfare, waiting for House Republicans to make their fiscal moves and betting they would get so much criticism that ultimately they would compromise — much like what happened between President Bill Clinton and Republicans in the 1990s. Last summer, Mr. Obama and Speaker John A. Boehner nearly clinched a “grand bargain” reducing deficits up to $3 trillion over 10 years, but the deal fell apart over taxing the wealthy — an issue that continues to divide the parties.
Today, Mr. Obama and Republicans are battling rather than making deals, positioning themselves for an election that will determine which side has the upper hand in December, when critical budget deadlines could force a compromise in a lame-duck Congress.
Despite the impasse, Mr. Obama appears to have reaped some advantages. Polls show that voters overwhelmingly agree with him that higher taxes on the wealthy must be part of a solution. And by smaller margins, voters favor him over Congressional Republicans when asked who can better reduce deficits while protecting needed programs. That plays to his re-election strategy: while the midterms amounted to a referendum on his record, Mr. Obama is framing 2012 as a choice between two distinct approaches.
But the downsides for Mr. Obama have become clear. His partisan turn undercuts a central promise of his 2008 campaign, to rise above the rancor. And by neither embracing Bowles-Simpson nor explaining his objections and quickly offering an alternative, Mr. Obama arguably failed to show leadership on perhaps the country’s biggest problem. This month, in a New York Times/CBS News poll, 59 percent of Americans disapproved of his handling of the deficit.
Looking back, administration officials insist that Mr. Obama was right not to adopt the commission plan. “You couldn’t get a C-plus on a political strategy paper that argues that would be the way to get something done,” said Gene Sperling, an economic adviser.
Three weeks ago Mr. Obama met with Erskine B. Bowles, a former chief of staff to Mr. Clinton who was a co-chairman of the commission along with former Senator Alan K. Simpson, a Republican. In speeches nationwide, the chairmen have expressed disappointment that the president — and Republicans — did not take up their plan.
On a quiet Friday in a room off the Oval Office, Mr. Bowles and Mr. Obama chewed over cheeseburgers and their differences.
“The president wanted to make sure that we understood that he had had a strategy to take the framework of what we’d negotiated” on the commission, Mr. Bowles said, “and to use that as a vehicle to negotiate a deal.”
Mr. Obama said that if he had “put his arms around” the plan immediately, Mr. Bowles recalled, it “would have been savaged by Republicans, and that would have killed it.”
A Commission Is Born
From the start, some Obama advisers were wary of a commission. But while the administration was consumed in its first year with initiatives that critics would denounce as big-government liberalism — the stimulus package to help revive the economy and the health care law — the president had mused to aides about a bipartisan panel to address the mounting debt . He had inherited a $1.3 trillion deficit for 2009, roughly the size of the 2012 shortfall, and benefits for an aging population soon would increase deficits to unsustainable levels.
In the summer of 2009, he charged economic advisers with researching the history of presidential commissions. Their findings were discouraging: in decades of such panels, only one, the 1983 Greenspan commission to save a bankrupt Social Security system, had produced results.