- The Washington Times - Monday, February 14, 2011

A year ago, President Obama left a gaping hole in his budget, but promised that his deficit commission would fix it. On Monday, he released his new budget and the hole remains, though this time he dropped the semblance of a fix and instead accepted that his budget shows deficits for the foreseeable future.

While he does call for some tax increases and spending cuts, Mr. Obama’s 2012 spending plan doesn’t deal with the rising costs of Social Security, Medicare and Medicaid, failing to take advantage of several of the commission’s recommendations aimed at curbing the costs of the fastest-growing parts of the federal budget.

As a result, several budget analysts said, Mr. Obama missed a golden opportunity to prove he’s serious about reducing the nation’s annual trillion-dollar deficits and overall $14.1 trillion federal debt.

“What that says is basically you’ve got last year’s budget dressed up, and that raises the question what did you learn from the commission,” said Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of the conservative-leaning American Action Forum. “They took a complete pass on that, and they put out a budget which is at best characterized as political strategy and at worst characterized as pandering.”

Mr. Obama created the high-profile deficit commission by executive order last year after Congress was unable to create it by law.

The president charged the 18 members with coming up with ways to balance the budget, excluding interest payments on the debt, by 2015, and to close the country’s long-term budget gap. In fact, the White House said the commission was the key to closing the deficit Mr. Obama acknowledged his budget contained.

When the commission rolled out sweeping recommendations in December, it failed to secure the 14 votes needed to earn an automatic vote on Capitol Hill, but the report won widespread praise for at least trying to tackle the big issues.

Commission members hoped Mr. Obama would lean on their recommendations in his 2012 spending plan, but the proposal he presented Monday relied only sparsely on their work: eliminating the in-school interest subsidies in federal student loan programs, calling for corporate tax reform and laying down a marker that fixes the imbalance in payments to doctors who treat Medicare patients.

Otherwise, it shelved the commission’s more controversial proposals aimed at reining in the skyrocketing cost of Social Security, Medicare and Medicaid, and enacting tougher caps and deeper cuts to discretionary spending.

That leaves the White House’s budget in the red every year in the next decade, and even when interest payments on the debt are removed — amounting to half a trillion dollars per year by the middle of the decade — the government still will post a deficit of more than $300 billion in 2015, the year Mr. Obama had promised to reach balance.

Still, the White House on Monday said when judged by “sustainable” deficits, it has succeeded.

“This budget does accomplish what was the task given to the commission, which was to bring the deficit down to 3 percent of the economy so that we would have a sustainable level of federal financing in the future,” said Jacob “Jack” Lew, the White House budget director.

Mr. Lew also said in his experience, not putting forward an actual plan is a better path to success than releasing a proposal that leads lawmakers to draw lines and rule it out prematurely.

He said when President Reagan laid out his own proposal in 1981, it went nowhere. But several years later, when Reagan sat down at the table with Democrats to have an open discussion, they were able to reach agreement.

“In areas which require bipartisan consensus, I think you’d be hard-pressed to find a moment where either side going forward with a dramatic plan has actually moved the process forward,” Mr. Lew said. “I think what the president has tried to do is set a tone for the discussion so that we can engage in a responsible way. I believe that’s the way you have effective discussions.”

Robert Greenstein, executive director of the liberal-leaning Center on Budget and Policy Priorities, said the commission on occasion would set out a funding target without specifics for how to meet it - much as Mr. Obama’s budget does in key areas such as his proposed transportation spending increase.

“The idea that the fiscal commission had detailed proposals to get to all its fiscal goals that the president ignored really isn’t right,” he said.

Other analysts said the president was squandering the moment.

“The president has reneged on his modest pledge last year to bring deficit spending down to 3 percent of GDP by 2015, and he’s also ignored the recommendations of his own deficit commission,” said David Primo, a scholar at George Mason University’s Mercatus Center. “If he won’t step up now, when will he? Once the economy recovers, we’ll hear that tax revenues are up and that cuts aren’t needed. If the economy worsens, we’ll hear that more failed stimulus spending is needed.”

To be sure, Mr. Obama is not the first president to duck major changes, nor is he the first to employ techniques to make the budget look better.

In some instances, such as transportation, the president counted on future revenue, though he didn’t say where the money would come from. Other times, Mr. Obama took 10 years’ worth of revenue and spent it all in one or two years upfront. While that conforms to budget rules, it just shifts the long-term challenge from one account to another.

Sen. Tom Coburn, Oklahoma Republican and one of the commission’s members, said Mr. Obama made a political choice in the budget not to pursue the commission’s recommendations.

“I think they’re not about to expose themselves until they can get an agreement, and I think the budget is unfortunate,” he said. “We needed strong, courageous leadership right now.”

He said there is something to Mr. Lew’s point that a unilateral plan from the president could be counterproductive, but said the administration has not made use of the three months since the election to begin the conversation all sides agree needs to happen.