Obama’s Deficit Dilemma

WASHINGTON — President Obama was backstage at an auditorium at George Washington University last April preparing to give a major speech, when William M. Daley, then his chief of staff, spied an unexpected guest in the audience: Representative Paul D. Ryan, the Republican chairman of the House Budget Committee, whose budget plan Mr. Obama was about to shred.
Try to tell the president!” Mr. Daley directed an aide.

It was too late to deliver a warning. Mr. Obama went on stage and outlined his proposal to reduce deficits — but not before he flayed the Ryan plan, saying its deep tax cuts and deeper spending reductions would harm students, seniors, the disabled and the nation.

“It’s not going to happen as long as I’m president,” Mr. Obama vowed.

Ten months later, the attack that left Mr. Ryan fuming in the front row is better remembered than the ideas Mr. Obama presented that day, administration supporters lament.

It came just a few months after the president had opted not to endorse the recommendations of a deficit commission he had created in hopes of brokering a bold, bipartisan deficit deal. That gave rise to a portrayal that has stuck, popularized by Republicans, pundits and some Democrats: that the president, out of political timidity, snubbed his own panel’s plan.

Mitt Romney, a Republican presidential candidate, recently charged that Mr. Obama “simply brushed aside” the plan by the so-called Bowles-Simpson commission (named after its two chairmen) — even though he and most Republicans reject it for its proposed tax increases. Warren E. Buffett, an Obama ally, has said ignoring the plan was “a travesty.” Former Representative John M. Spratt Jr., a Democrat on the commission, said the administration had had an opportunity “to stand up and be counted, and for the most part they weren’t there.”

Yet starting with that April speech, Mr. Obama has come to adopt most of the major tenets supported by a majority of the commission’s members, though his proposals do not go as far. He has called for cutting deficits more than $4 trillion over 10 years by shaving all spending, including for the military, Medicare and Social Security; overhauling the tax code to raise revenues and lower rates; and writing rules to lock in savings.

But he did so months after the commission’s report in December 2010, and largely without acknowledging that he was borrowing from its recommendations. That caution reflected White House concerns about liberals’ hostility to the plan and, aides say, Mr. Obama’s certainty that Republicans would reject anything he endorsed.

The story of how Mr. Obama dealt with Bowles-Simpson illuminates his struggles with the deficit politics that have curbed his ambitions and forced him to confront the limits of his persuasive powers. Faced with an even more intransigent opposition after Republicans captured the House in the 2010 elections, Mr. Obama made a tactical retreat, suppressing his instincts to “go big” in favor of a go-slow approach.

He settled into trench warfare, waiting for House Republicans to make their fiscal moves and betting they would get so much criticism that ultimately they would compromise — much like what happened between President Bill Clinton and Republicans in the 1990s. Last summer, Mr. Obama and Speaker John A. Boehner nearly clinched a “grand bargain” reducing deficits up to $3 trillion over 10 years, but the deal fell apart over taxing the wealthy — an issue that continues to divide the parties.
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