A doomed but useful budget

By JOSHUA GREEN

New York Times News Service

Even before President Obama introduced his 2013 budget on Monday, the condemnatory e-mails from Republicans were rolling in: The budget raises taxes, especially on the rich; it does nothing to rein in entitlement programs like Medicare and Medicaid, the biggest drivers of projected future deficits; and it cuts military spending, a move that most Republicans abhor.

Summing up the feelings of his Republican caucus, House Budget Committee Chairman Paul Ryan dismissed the president’s blueprint as “a political document” that wasn’t going anywhere. Ryan and his colleagues are correct on all counts. But Obama’s budget is noteworthy nonetheless, not because it has any hope of getting through Congress this spring but because it shows he has learned an important lesson about governing in the modern age, especially when faced with a truculent opposition.

During Obama’s first three years in the White House, the abiding liberal complaint against him was that he was a rube, who routinely made unnecessary concessions by proposing some reasonable compromise and then bargaining away the farm as savvy Republicans held fast to their partisan ideal. That was the pattern last April, when Republicans threatened to shut down the government. It repeated itself over the summer when Obama attempted to negotiate a “grand bargain” to cut the deficit. And it happened again in August during the debt-ceiling fight. Obama appears to have taken all this to heart. His budget indicates that he now understands that a “reasonable compromise” is an end point, rather than a starting point, for negotiations and that partisanship sometimes has its uses.

How can a budget with no hope of passing be construed as useful? Because Congress has become so dysfunctional that the budget process no longer functions as intended. In years past, a president’s plan would be introduced, debated, and some version of it passed, setting the parameters for what Congress could spend (actual outlays are done separately, through appropriations bills). But congressional partisanship has become so intense both parties are increasingly loath to vote on budget resolutions that would expose them to attack. Democrats haven’t introduced one in three years.

Republicans under George W. Bush skipped a few years, too. The danger in going forward was illustrated last year, when House Republicans passed Paul Ryan’s budget and were immediately assailed for its Draconian cuts to Medicare and other programs. Ryan’s plan didn’t go anywhere. But many of the Republicans who voted for it will have a tougher time getting re-elected this fall. In lieu of the formal budget process, Congress has cobbled together a series of “continuing resolutions” like the one that nearly shut down the government in April. To avoid the August shutdown and debt default, the parties struck another deal that carries through this year.

The real battle about how to resolve the great issues of taxing and spending probably won’t be fought in the budget process at all, but in a separate, high-stakes negotiation this December. By then, the Bush tax cuts will be on the verge of expiring; the $1.2 trillion in automatic cuts to military and entitlement programs, agreed to as part of the debt-ceiling deal but dreaded by everyone, will be about to take effect; and the debt ceiling will need to be raised once more. Dysfunctional or not, the parties will have to strike a deal.

That’s why Obama’s budget really does matter: it’s an opening bid in these negotiations. And its partisan character ought to quiet his liberal critics — it doesn’t look as if he’s about to concede anything prematurely. When criticized for not having bargained harder in the past, Obama has replied that as the person ultimately responsible for the country’s well-being, he cannot risk something like a national default. He didn’t have the leverage to force the issue.

This time he will. If no deal is struck, taxes will rise substantially, the Pentagon’s budget will be slashed, and Medicare and Medicaid will continue to grow unabated. As their response to his budget has made clear, that’s an outcome that Republicans simply won’t stand for.

Joshua Green is a national correspondent at Bloomberg Businessweek.