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Obama’s budget gambit: Return of the 'grand bargain'?

President Obama is for the first time proposing a budget that includes changes to Social Security and Medicare. This infuriates the left but could open the door to compromise with Republicans. 

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"Obama is a post-Clinton liberal,” says Julian Zelizer, a professor of history and public policy at Princeton University. “He’s a liberal on social policy, he believes in government, and he has embraced the idea of long-term deficit reduction as something that’s as Democratic as it is Republican.”

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By proposing technical fixes to Social Security and Medicare that the Republicans support, Obama is trying to jump-start talks toward a “grand bargain” on deficit reduction. If successful, that would represent a big step away from the sense of fiscal crisis that has permeated Washington the past two years.

The timing for Obama’s gambit may be optimal: He remains reasonably popular, and the Republicans are back on their heels, following last November’s election defeat.

In his response to Obama’s budget, Republican House Speaker John Boehner mixed a bit of praise in with the criticism.

“While the president has backtracked on some of his entitlement reforms that were in conversations that we had a year and a half ago, he does deserve some credit for some incremental entitlement reforms that he has outlined in his budget,” Mr. Boehner said.

Still, Republicans criticized the president for producing a budget that never reaches balance. The House Republican budget gets to balance in 10 years, through austerity measures.

Instead, Obama followed his tradition of calling for “investments” – read: spending – on infrastructure and education, funded in part by tax increases on the wealthy. His $1.8 trillion in proposed new savings and tax revenue during the next decade would in part replace the “sequester,” the $1.2 trillion in automatic spending cuts that went into effect March 1. 

For years, the debate in this town has raged between reducing our deficits at all costs and making the investments necessary to grow our economy,” he said. “And this budget answers that argument because we can do both. We can grow our economy and shrink our deficits.”

The president justified this approach with a bow to the Clinton era.

“In fact, as we saw in the 1990s, nothing shrinks deficits faster than a growing economy,” he said. “That's been my goal since I took office, and that should be our goal going forward.”

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