Friday, March 4, 2011

Obama's Budget Pits Him Against His Own Life Story

HuffPost Reporting
by Sam Stein

WASHINGTON -- The budget introduced by the Obama administration on Monday is notable not only for the cuts suggested or investments proposed, but also for the message it conveys about the political identity of the president himself.

Aiming to cut the annual deficit by more than $1 trillion over the next decade, President Barack Obama chose to slash across the board. But the most glaring cuts were not to a bloated defense budget, or to entitlement programs that both parties say are in need of reform. Rather, they were to programs and policies that are at the heart of Obama's personal story.

A former community organizer in Chicago, Obama proposed a 50-percent cut to a $700-million community-service block grant program. A former lawyer who touted his work to improve living conditions for the poor, Obama proposed a sharp cut in energy assistance for low-income families. A graduate-school alumnus who only recently, and quite publicly, was able to pay off his debts, Obama proposed refiguring loan programs so that students would accrue interest even while they're enrolled.

Combined, the new policies and cuts carry more symbolic than fiscal significance. They would save only a pinch of money from being added to the deficit. But that may well be the point. Senior administration officials, in previewing the budget, didn't downplay or hide any of the above provisions -- either by spinning their impact or obscuring their language. Rather, they were part of the big pitch. Office of Management and Budget Director Jacob Lew made a point of saying on CNN's "State of the Union" that it was "not easy" to cut those programs on which "President Obama worked [as] a community organizer."

Even administration allies who were gloomy about the cuts admitted that they made for solid politics.

"It tells you he is making a statement," said Andy Stern, the former president of the Service Employees International Union, a longtime Obama supporter and a member of the president's fiscal commission. "It is shared sacrifice ... They stuck their chin right out asked people to hit them, and they are being hit. But it is with the intention, particularly with independent voters, of appreciating that no one is immune from being hurt here."

But if the goal was to present an image of a president putting himself through personal pains, not everyone got the message. Hours after the budget was formally released, Republicans insisted that it was too limited and unworthy of serious consideration.

Progressives, meanwhile, noted that while Obama was slashing money for community-service grants and energy assistance for the poor, he was calling for a lot less give from the other side of the income distribution. Not only had the president signed an extension of the Bush-era tax cuts for the wealthy during the lame-duck session, his budget brought a yet-to-be-enacted bank tax down from an initial proposal of $90 billion over 10 years to about $30 billion.

"I think if they were going to go the 'these cuts will hurt me as much as they hurt you' route, they should have gone into some middle-class programs and not just 'poor people' programs," a senior Democratic official said.

Not everyone in progressive circles, however, jumped to trash the president's plan. There is, some Obama allies said, more nuance to some of the proposed cuts.

Jerry Kellman, a social activist who mentored Obama during his community-organizing days, noted that with community-service grants, much of the money doesn't end up in the hands of groups that do on-the-ground work, but rather with municipal governments which spend it on a variety of projects. Far more stressful, he said, were the cuts to the Low Income Home Energy Assistance Program, which Obama officials have defended as a simple adjustment to the drop in commodity prices. But even then, Kellman acknowledged, Obama had to consider broader political implications.

"Would we be better with Barack Obama getting reelected or Republicans taking back control of the White House?" he asked. "Anyone who wants Obama to act in ways that wouldn't get Obama get reelected is being highly unrealistic about politics."

Rich Williams, a higher-education advocate for the U.S. Public Interest Research Group, the national lobbying arm of a coalition of public-interest organizations, noted that while billing in-school interest rates would result in further debt burdens for students, the money saved would be plowed back into funds to help prospective students pay for tuition.

"It is less bad than it sounds," Williams said of the proposal. "The in-school interest subsidies definitely helps kids out, but it is untargeted financial aid. While some show some level of need, by the time they finish their graduate degree not all of them will have trouble playing their loans back. If you remove the $2 billion we are putting towards those subsidies and find a different way to target it so that those who need it get it, it really makes more sense."

And in the world of policy think tanks and academia, there was genuine appreciation that amid the cuts, Obama had proposed some infrastructure investment. This, offered Bill Galston, a former policy advisor to President Bill Clinton and fellow at the Brookings Institution, was more a measure of the president's pragmatic ethos than anything else.

"I think this budget is evidence that the president meant it in the State of the Union when he talked about a new emphasis on investing in the future," said Galston. "It's also consistent with fiscal reality as the administration understands it. They can only boost investment by clearing fiscal space for it."

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