Wednesday, March 4, 2009

A Thought On The Obama Budget

The $3.6 trillion budget sent to Congress by the Obama Administration has caused consternation in a lot of places. Republicans are railing against deficits as are moderate Dems highlighted by Indiana Senator Evan Bayh who wrote in the Wall Street Journal today that the spending bill should be voted down.

While an admitted liberal I am a big believer in fiscal discipline and a $1.75 trillion deficit makes me very uneasy.

That being said,, I think that the Obama team is handling the budget more strategically than they did the Stimulus Bill. This budget number is an effort on his teams part to strengthen their negotiating position.

In the case of the Stimulus Bill, some believe that Obama went in asking for what he wanted and then negotiated from there and ended up losing some of his priorities like state funding and education.

In this case I think he is following the rather successful method of the Bush 43 administration. Ask for way more than you want,, if you get it,, great. Yet, if you compromise you end up going down to the number you wanted anyway.

17people would not be surprised if this bill ended up being significantly smaller than the $3.6trillion number initially proposed. Obama knows that he can ill afford to end up negotiating to a number that isn't adequate enough to get money into the system. So he is asking for much more than he really wants, but is at the max at what he wants to spend.

Its a negotiating ploy and a smart one. In the end whether he comes down $250bln, $500bln or $750bln, he's going to get what he really wants in the bill.

The final number is and the subsequent effects are all people will remember.

And one more thing to note, being a popular President with a muscle-less opposition Obama has many plays that will work for him.

If Obama makes concessions, he wins by looking bi-partisan, if he passes it without any Republican votes, he wins because they look unwilling to work with him because they are listening to Rush Limbaugh.

The public won't remember or care what the original budget number was as long as people begin to see a light at the end of the tunnel.

The far more important fact is this... whether it be the budget battle, the stimulus fight, or the upcoming war for health care, the politics are secondary if these programs don't begin to turn around the economic situation that we are in.

1 comment:

Patrick said...

I think this is the case also.

After the stimulus bill Obama noted that he wished he had initially left the tax cuts out, so the republicans could argue for them and get them and thus everyone would feel like they won.

I think there is probably a list of sacrificial lambs somewhere- budget items that the administration is okay with if they get cut this year.