AmericanOpinion

The showdown

The 2011 budget turmoil has drawn the battle lines for the coming election.

By Richard McGregor

During the tense budget talks that bought the United States to the brink of sovereign default in July 2011, Barack Obama tossed a barb at Republicans, reminding them they had already voted to cut healthcare and other government programs. “Excuse us for trying to lead,” shot back John Boehner, the Republican speaker of the House of Representatives. In the eyes of the White House and Democrats, the Republican vote Obama referred to will hopefully lead the conservatives in one direction only, over the cliff in the 2012 presidential election; they know that iconic Democrat-initiated government programs such as Medicare have been politically untouchable for years. But was this what Boehner had in mind?

The 2011 budget vote, in which the cuts were passed by the Republican majorities, amplifies a greater truth about last year’s struggle in Washington. If you put aside for a minute the content of the budget that was voted through, the Republicans have maintained political momentum for one single reason, because they have been willing to put their grand designs for remaking the country on the line. In this case, it was the budget drawn up by Paul Ryan, the Republican’s chief fiscal hawk, which turned Medicare into a vouched program to cap spending on elderly health, while also approving large tax cuts for the wealthy.

Ryan left Social Security untouched, perhaps because the popularity of the program made it a bridge too far even for radical Republicans. But he also protected his right flank, by not touching defence spending.

In contrast to Republican activism, the Democrats were on the defensive for most of 2011. After their opponents took control of the House of Representatives in a sweeping victory in 2010, the Democrats have been unable to come up with a coherent and consistent response to America’s generational fiscal crisis. For nearly three years the Democrats have not managed to coalesce around a budget in Congress. Instead, they have been gripped with building a wall around Social Security and Medicare, which they regard as issues that they can use to flog Republicans and to keep the presidency. But without breaching that wall, they have ruled themselves out of participating meaningfully in any serious discussion about how to bring long-term public spending under control.

Unlike other social democratic parties around the world, including the Labor parties of Australia and New Zealand, the Democrats have not been able to rise collectively above their devotion to past policy triumphs in order to remake them for a new age. The Democratic paralysis has left Republicans free to demonise government spending in all its forms, apart from national security. The Democrats, by contrast, have been bogged down in a sterile defence of an untenable status quo.

It is true that Boehner and Republican leaders have been riding the Tea Party tiger and that the standing of the Congress under their leadership has fallen to single-digit approval ratings; however, their plummeting popularity has as much to so with the take-no-prisoners prosecution of their agenda in Congress as it has to do with the agenda itself, a lesson they have taken on board in recent months.

The White House has been caught flat-footed as well. Obama declined to embrace a big deficit deal on his own when it was presented to him on a platter by his own bipartisan fiscal commission in late 2010. When he tried to negotiate the deal with Boehner during the mid-year debt-ceiling crisis, it fell apart. As a result, Obama spent a lot of 2011 on the defensive. He found his voice in September, transforming his push for an extra stimulus plan to keep the nascent economic recovery alive into a national conversation about jobs.

President Obama didn’t call it a stimulus plan, of course—it was called a jobs act because stimulus has become a dirty word in Republican Washington; an economic policy that dare not speak its name. The Republicans have branded any traditional pump-priming initiatives as “job-killing government spending”, a position reinforced by their Tea Party-infused supporter base, which blames Obama for the bulging deficit. The President’s barnstorming support of his jobs bill incorporating the tax extensions achieved the rare feat of putting the Republicans on the defensive on taxes.

After fraught negotiations with the Republican house, a version of the plan passed just ahead of Christmas, providing a small stimulus to the economy beyond Christmas, until March. When that extension expires, Obama and Congress will take up the fight again. The extension of payroll taxes may provide nothing more than a sugar high to the economy, in the words of Ryan, but the debate’s political significance has been far greater.

FOR the first time in 12 months, Obama had a platform to make a bigger argument in defence of government spending and investment and a fairer tax system, which he says requires the wealthiest to pay more. Instead of being pummelled day-in, day-out by Republicans about government expenditure, the President was able to shift the battle onto firmer ground of his own design.

It is a fight he had better continue to win. If Obama can’t make and prevail in that argument, then no one in an otherwise lacklustre Democratic caucus has a hope in hell. And if he loses, prepare for a Republican presidency, and conservative control of both houses of Congress. That’s some change after the 2008 election, and perhaps not the kind Obama had in mind.

This is an article from the American Review issue "The right candidate" available as an iPad app. Download the app from the iTunes Store.