President Barack Obama’s upcoming budget for the 2014 fiscal year, promising tough reforms and cuts to entitlement spending, is taking a beating from both his base and the GOP.
For one, the president’s proposal includes taxes in exchange for entitlement cuts. Though Republicans want those cuts to entitlements, they are opposing new taxes.
“If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” House Speaker John Boehner said in press statement on April 5. “That’s no way to lead and move the country forward.”
Some Democrats, labor and entitlement advocacy groups are stunned Obama has offered such a compromise to reduce Social Security benefits so early in the game, especially when the GOP is yet to present something.
“I have some tactical concerns about the White House approach and some substantive concerns,” Rep. Chris Van Hollen, D-Md., the top Democrat on the House Budget Committee, told the Washington Post last week. “The president has essentially said this is his end point and this is a compromise proposal. Republicans have rejected this as a compromise. From the Republican perspective, the president’s budget is the starting point for negotiation.”
Whether this is Obama’s last push for a compromise with Republicans, some say including entitlements cuts shows the president to be a leader who genuinely wants conciliation. But make no mistake about it; there could be another purpose to Obama’s 2014 budget: a strategy to divide the GOP and possibly set the tone for debate when that budget fails.
“He is trying to position himself in the minds of the public as reasonable and flush the Republicans out as unreasonable,” said Isabel Sawhill, senior fellow and economist at Brookings. “The fact that [Obama] is putting forward cuts in entitlement, including Social Security, is very significant.”
Sawhill, who was assistant director of the Office of Management and Budget during the Clinton administration and was responsible for a third of the federal budget, said while the president has dropped the amount he’s seeking in taxes it shouldn’t undermine that the proposal is still more conciliatory than past plans.
This conciliation may just entice some of the more moderate Republicans who have wanted entitlement cuts -- even if it is quid pro quo. Conservatives have remained firm against a new taxes.
Lindsey Graham, R-S.C., is already encouraged by Obama’s offer.
“There are nuggets of his budget that I think are optimistic,” Graham said on “Meet the Press” on Sunday. “It’s overall a bad plan for the economy … but we’re beginning to set the stage for the grand bargain.”
“I’m looking for the biggest spending cut in American history by reforming entitlements, saving those entitlements,” he added. “And the president is showing a little bit of leg here. This is somewhat encouraging. His overall budget is not going to make it, but he has sort of made a step forward in the entitlement reform process that would allow a guy like me to begin talk about flattening the tax code and generating more revenue.”
And here is where Obama could divide the GOP on the budget issue. While Graham can imagine beginning negotiations with the White House, that effort could be lost on someone like Boehner who walked away from a deal like this during last year’s fiscal cliff negotiation last year and unsuccessfully tried to pass his own plan.
Graham said Obama’s leadership puts the burden on Republicans to do the same.
“Republicans should be pleased that he is offering some cuts to entitlements, but I think there is a strong possibility it could divide the Republican Party,” Sawhill said. “It may be a part of Obama’s strategy to divide the party. The conservatives don’t want new revenues in anything. The president is still insisting on revenue, and I don’t think the president is going to agree on a package that doesn’t have some revenue in it.”
The possibility of entitlement reform is just that until the president releases his budget, said Kevin Hassett, director of economic policy studies at American Enterprise Institute. When Obama’s bill comes out Wednesday, Hassett sees two possibilities: Obama has already made those offers so Republicans can ignore them; or if the bill contains anything new the right will need to respond.
“The ball is not in the Republicans’ court until the president’s budget comes out,” Hassett said, adding that Obama’s budget will not become law. “It’s a charade that goes on every year.”
And Sawhill agrees Obama’s budget will not survive in full because it contains many things that Republicans find unfavorable.
“That doesn’t mean it won’t have an impact,” she said. “It [could serve the purpose of] influencing debate.”