The Budget: Obama's next campaign...and Hillary Clinton's warm-up act
"I have no more campaigns to run."
President Obama said it. We do not have to believe it.
Yes, social media judges awarded the 44th President of the United States with the coveted State of the Union "Sick Burn" award for what came next. (I didn't know the Sick Burn award existed, either. Dying to see the trophy.)
Mr. Obama's budget, debuting Monday morning after a build-up twice as long as for Super Bowl XLIX, is the most methodically political of his presidency. The post-recession era has given Obama room to boost spending on guns and butter, propose $650 billion in new taxes, abolish the sequester, seek nearly $500 billion in infrastructure spending and abandon any pretense of pursuing a balanced budget - now or ever. These initiatives and the rhetoric built around them - starting with, but not limited to, "Middle Class Economics" - kickoff the 2016 Democratic campaign.
Yes, that includes Hillary. More precisely and more immediately, it includes Senate Democrats who see bounce-back potential and revenge against the Republican class of 2010 that foreshadowed Sen. Harry Reid's descent to minority leader - a journey that took his caucus from a high of 60 votes in July of 2009 to today's low of 46 (58 and 44, respectively, if you subtract independents aligned with Democrats). But it also sets the terms of the policy debate for Clinton, while her advisers debate when to launch her bid for the White House, with April-versus-July the latest topic for her internal coronation debating society.
Here are the big numbers: $3.99 trillion budget for fiscal year 2016; projected deficit of $474 billion (2.5 percent of GDP); for the ten-year budget cycle, $650 billion in higher taxes, $277 billion in tax cuts and $400 billion from slowing the growth of mandatory spending; $1.091 trillion in domestic discretionary spending with $561 billion for defense and $530 billion for non-defense accounts; projected yearly GDP of 3.1 percent; projected unemployment rate of 5.4 percent and projected inflation rate of 1.4 percent.
The president no longer feels constrained by deficit-era politics or GOP fretting about the size or economic relevance of the national debt. As an academic matter, he has been there since his Dec. 2011 speech in Osawatomie, Kansas, that branded income inequality as the "defining issue of our time...a make-or-break moment for the middle class."
More than three years later, unemployment has fallen from 8.5 percent to 5.6, annualized economic growth has increased from 1.8 percent to 2.5 percent and the deficit has fallen from $1.3 trillion to $564 billion. That's changed the political climate, though wage growth continues to lag behind pre-recession trends and Mr. Obama's made scant progress on reducing inequality.
The president knows Democrats are vulnerable on these two economic issues - wage growth and income inequality - even as he proclaims "there's almost no economic metric by which you couldn't say the that the US economy is better." Wages are up slightly, but not nearly enough to make up for great recession loses or years of sluggish buying-power growth that preceded it.
That's why the White House went out of its way Friday to chide Mitt Romney and "some Republicans" (meaning Jeb Bush) for suggesting they had an interest in boosting wages and closing the inequality gap. White House Press Secretary, long Sphinx-like in White House appraisals of GOP presidential challengers, appeared all-too-eager to engage.
"We are seeing more rhetoric from Republicans indicating what was a previously unstated concern for people who aren't at the top," Earnest said. "And the President certainly welcomes their interest in these issues. And as I mentioned, I think Governor Romney is genuine when he's articulating that concern. The problem is -- and this is something that we've seen too often from the Republican side -- that they've essentially used the middle class as a talking point and not actually put forward policies that benefit the middle class."
That's why Mr. Obama's budget seeks more taxes on the wealthy, spends more on infrastructure and seeks the highest post-stimulus boost in annual non-defense spending (seven percent or $74 billion) of his presidency - thereby shattering sequestration spending caps. These are political lines the president knows Republicans, still focused on deficits, debt and spending caps, will not cross. The coming clash - with its whiff of shutdowns and standoffs - will only be one turn of the budget's political screw.
Speaking of shutdown, Mr. Obama's remarks on the budget will be delivered at the Department of Homeland Security, to illuminate the confrontation with Republicans, who are focused on trying to reverse executive actions on immigration over funding for that agency for the remainder of the fiscal year. The President will win this early skirmish because Republicans cannot and will not find the votes to beat him and, so far, haven't figured out a way to extricate themselves or explain to their base this painfully obvious reality.
Mr. Obama is also liberated by universal Republican control of Congress. It's not his preference, obviously, but it clarifies differences in ways the previously divided Congress did not. Senate and House Democrats are, by in large, with the president on the big-ticket spending and tax items in the budget and eager to bedevil and slow GOP plans when and where possible - Exhibit One: the month-long Senate Keystone XL pipeline debate. Senate Democrats are especially keen to claim credit for improved economic performance and use the momentum of increased consumer confidence to set the 2016 debate on a We-were-right-they-were-wrong axis.
"It's as much a budget for the Senate Democratic 2016 campaign as it is for Hillary," said Stan Collender, long-time budget analyst and executive vice president of Qorvis MSLGroup "Democrats have a decent shot at retaking the Senate and this is designed to help them. There's no doubt in my mind that Obama wants to help, or at least not hurt, the next Democratic presidential nominee and having a prohibitive favorite like Hillary makes it easier for him to see what will be good for her campaign. He wouldn't be able to do this if the field was wide open."
Republicans are defending 24 Senate seats in 2016, seven in states President Obama carried twice and two in states he carried in 2008 (North Carolina and Indiana). GOP pickup opportunities are currently limited to Nevada and Colorado, but no serious Republican would describe races against Reid or Colorado's Michael Bennet's as walk-overs. Democrats see GOP vulnerability in Illinois' Mark Kirk, Pennsylvania's Pat Toomey, Wisconsin's Ron Johnson and, possibly, Kelly Ayotte in New Hampshire.
But there's a great deal for Clinton in this budget. Her State of the Union Tweet was her tell. By telling the world President Obama "pointed" the "way to an economy that works for all" Clinton implicitly announced she would be following that path and that she would enlist others to "step up and deliver." Clinton has not been involved in any White House deliberations on the economy, at least not directly, but top White House counselor John Podesta - soon to leave the West Wing and on what appears to be an unobstructed path to be general chairman of Clinton's campaign - is far from indifferent. Brian Deese, currently deputy director at the Office of Management and Budget, will replace Podesta and may in the future play a role in Hillaryland.
Officially, Clinton had nothing to say about the Obama budget with spokesman Nick Merrill offering that the numbers and policy spoke for themselves.
But Democrats close to Clinton's campaign-in-waiting say the Obama budget is a welcome prelude to her eventual campaign for two reasons: the month-long rollout has kept Democratic priorities at the center of the national debate and, while giving her team time to hash out the proper time to announce (the debate there, with no swift resolution in sight, comes down to the staying-above-the-fray camp versus the she-needs-time-in-the-trenches camp). "That conversation continues and there are good arguments on both sides," said one Clinton confidant who favors an earlier announcement. "That being said, this is an important year for this debate, and the president is trying to set the stage for where the party needs to be on the economy. And Clinton knows what's happening now and where it's heading is not hurting her at all and is probably helping."
A side benefit is Obama's budget is more progressive than previous incarnations and when Clinton tweets praise of that general direction before Massachusetts Democratic Sen. Elizabeth Warren does, you know Obama and Clinton methods - if not motives - are converging. Sympathetic Democrats acknowledge Clinton needs proximity to Obama this year to cultivate party unity and keep restive progressives from becoming militant ones. Obama's budget draws brighter lines over taxing the wealthy and offshore corporate profits to pay for bedrock Democratic spending initiatives. And that helps Clinton.
It's Obama's last budget and his next campaign. But Clinton, in the end, will need to win this one.
