Obama’s budget shows how difficult it will be for him to achieve his 2nd-term goals


President Obama has made smart public investments a  linchpin of his presidency. As a candidate, he dreamed of building the highway system for the 21st century -- investments in clean energy, research and development, electronic health records, education and other domestic programs that generate high economic growth over time. And he was able to achieve a bit of that in his first few months in office with his economic stimulus.

But if you look at the "discretionary" line in the above Congressional Budget Office chart, you can see where we're going. Discretionary spending -- that is, all the seed corn for the future -- is projected to continue to sink, relative to the size of the economy. Mandatory spending -- safety net and retirement programs -- will grow significantly.

The decline in discretionary spending is the result of years of budget battles with Republicans, who wanted sharp cuts in spending. Cutting domestic spending was politically more palatable than increasing taxes or trimming mandatory programs -- even though it's domestic spending that will generate the biggest returns to our nation in the future.

So it makes sense that as he unveils a new, aspirational budget, Obama will try to boost domestic spending. He's planning to propose $56 billion in additional 2015 spending,  split between defense and non-defense programs. And he wants to concentrate that spending in high-return areas like improving energy efficiency, job training and education.

It's a modest step. As he looks toward the final 2½ years of his presidency -- and prepares to frame the debate for the mid-term campaigns -- Obama wants to outline his vision without too many political constraints.

Republican opposition "is not going to stop the president from promoting new policies that should be part of our public debate," a White House official said Thursday.

But in taking that no-holds-barred approach, the president is also reminding us of his low odds of success.

In last year's budget, Obama incorporated a fiscal grand bargain that had been offered to House Speaker John Boehner (R-Ohio.). If enacted, it would have done much the same as Obama's new budget: It would have reduced short-term cuts to discretionary spending and helped the economy. But it also contained proposals deeply unpopular with Democrats, such as a less generous formula for calculating Social Security benefits.

The old budget proposal -- friendlier to Republicans -- went nowhere.

It's possible that by proposing a narrow set of policies, Obama can move Congress in his direction. But while the president is still open to compromise, he is no longer actively seeking it. And so, better to at least get your ideas out there, even if they're not likely to be passed.

 

Zachary A. Goldfarb is a staff writer covering the White House, focusing on President Obama’s economic, financial and fiscal policy.
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