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As soon as copies of President Obama’s budget proposal arrived on Capitol Hill in February, some members of Congress began to squirm. Sure, they acknowledged, the White House was planning to fix healthcare and invest heavily in infrastructure projects that have been ignored for decades. But did it all have to cost so much? The lawmakers who were squirming weren’t Republicans, who have made bashing Obama’s spending a full-time job this year. They were Democrats, who are supposedly on the president’s side.
“Our national debt is going up more than $1 million per minute,” Sen. Evan Bayh, D-Ind., told ABC’s George Stephanopoulos last month. “We have to borrow most of this money from abroad, which weakens our country. I think this is a time to show that we can economize, [that we can] do better than across-the-board increases that are many times the rate of inflation.” Bayh was talking specifically about an omnibus spending bill, but he, the House’s Blue Dog Coalition and other moderate Democrats have made it clear throughout the first few months of Obama’s administration that they’ll do all they can to trim the White House’s plans for government spending on just about any legislation, even if it means joining Republican opponents on key votes. The budget that both houses of Congress approved (on party-line votes) Thursday was a good example: Worried about debt, the Democrats in charge of writing the nonbinding resolutions, Sen. Kent Conrad and Rep. John Spratt, moved almost immediately to pare Obama’s plans well before they passed.
Republicans lost the last two elections, but they may have won the messaging war. Resistance to public investment has become second nature to the Washington establishment these days, and that could be a problem for Obama’s agenda in the long run. Nearly 30 years after Ronald Reagan took a chainsaw to federal spending, Democrats and members of the media have internalized conservative nostrums about the dangers of deficits. Their phobia of big public spending projects is so ingrained that they can barely comprehend the argument that Obama and many economists are making: Government spending can be useful, and not all debt is something to be scared of. If Obama is speaking a different language than the leaders of his own party and the reporters who cover them, he may have trouble keeping Congress on board with all his proposals.
“There’s been almost a cult around promoting this concern about the deficit,” said liberal economist Dean Baker, co-director of the Center for Economic and Policy Research. “It really created this mindset that the only way you evaluate economic policy is by whether you have a budget surplus.”
So the first few months of the new administration have brought the spectacle of a handful of moderates from both parties insisting on cutting $100 billion from the stimulus, even though the entire logic of a stimulus program is to jolt the economy back into action by spending as much money as possible. Members of the press, who like to ask questions that make them sound nonpartisan and pragmatic — in other words, questions that reflect conventional wisdom — picked up the anti-deficit tune at Obama’s news conference last week, asked the president why he was sticking his daughters with the bill. And Republicans, doubling down on the policies that got them into being the minority in the first place, have spent just about every day hammering Obama for pushing big new investments in services and infrastructure, instead of radically cutting taxes.
Obama has still gotten, more or less, what he’s after on most issues; the administration says it’s fine with the budget resolutions. But the Obama White House has had to defend the very notion that government can be part of the solution to America’s ailments. Liberal groups like MoveOn.org and the Campaign for America’s Future have spent heavily in pressuring moderate Democratic lawmakers to support Obama’s plans, especially members from purple districts, who have political reasons to buck the president. White House aides say there’s a fundamental disconnect between Washington’s focus on the dangers of spending and what Obama needs to do to get the economy moving.
Yes, the aides say, the deficits projected in Obama’s budget and the nonpartisan Congressional Budget Office estimates are large — $7 trillion by the end of 10 years, according to the White House, and more if you ask outside experts. Obama spends a fair amount of his time talking about the need to cut the deficit as well; the $7 trillion in his proposal is less, aides say, than what the debt would be under current policies put in place by George W. Bush. But the administration says that unlike the debt Bush that racked up over the last eight years by giving huge tax breaks to the rich while going to war in two different countries, the shortfalls in Obama’s budget are due to projects that should pay off for the economy as a whole. “If your family’s in trouble and you say, ‘I’m going to take a loan out to put a new pool in the backyard’ — probably not a good idea,” said one senior administration official. “But if you say, ‘Our family’s in trouble, and I need to take loan out to put our kids in college and make sure the plumbing works,’ we would think that’s a responsible use of debt. It will generate returns down the road.”
That kind of talk hasn’t been heard much in Washington since 1994. After congressional Republicans stormed to power in the midterm elections, Bill Clinton responded by folding on public investment and then, famously, declaring in his 1996 State of the Union address, “The era of big government is over.” By then, though, Clinton wasn’t leading a new movement so much as responding to reality. Democrats had been stuck with the “tax and spend liberal” label during the Reagan years, and the GOP’s anti-government message seemed to resonate with voters even when Republicans were running the government. (Never mind that Reagan’s tax cuts racked up huge deficits — he cut non-defense spending so drastically that people forget that part.) Clinton and other centrist “New Democrats” had seized on deficit reduction as a way for Democrats to dodge GOP attacks about spending — by bashing Reagan-era deficits, Democrats could make a good case that they, not the GOP, were the fiscally responsible ones.
From a purely political standpoint, the strategy seemed to have produced the party’s biggest electoral success; Clinton was the first Democratic president elected to two full terms since FDR. And now deficit reduction has become part of the bipartisan consensus in Washington; in fact, there are few Democrats still in office who remember when it was not an article of political faith. Most Democrats now in Congress have spent their whole career apologizing for or selectively blasting public spending. Of the more than 250 Democrats in the House, only 14 were in office prior to Ronald Reagan’s first inauguration. Fewer than 80 were in office to witness the 1994 GOP takeover, when the speaker’s gavel passed from Tom Foley to Newt Gingrich.
A decade and a half later, congressional Democrats have a hard time adjusting to a new era where public spending is not something shameful. And they don’t necessarily want to. For reasons of both politics and ideology, lawmakers from purple states or swing districts are particularly prone to anti-deficit rhetoric. “The deficit remains larger than our projected economic growth, an unsustainable state of affairs,” Bayh said in a statement Thursday night, after he and Ben Nelson of Nebraska were the only two Democratic senators to vote against Obama’s budget. “This budget will increase our borrowing from and dependence upon foreign nations.”
In the House, the Blue Dog Coalition, whose members were some of the first deficit hawks in the Democratic ranks, boasted of pressuring leaders to cut Obama’s proposal down to size. “While targeted, one-time deficit spending in certain instances may be necessary to protect our economy in the near term, we simply cannot sustain trillion-dollar deficits forever,” spokeswoman Kristen Hawn wrote in an e-mail to Salon. “The yearly interest payments we have to make on the debt already dwarf spending on homeland security, education and veterans’ health care. If we continue down this road, interest on the debt will soon constitute such a large part of our federal budget that it will prevent us from being able to make critical investments in any of these areas.”
Of course, the last time the country faced an economic crisis as deep as the one it’s in now, politicians didn’t dither about whether fixing it would add to the national debt; FDR’s New Deal shoveled money out of Washington as quickly as it could be printed. Many of the projects government largesse paid for back then are still with us now, concrete and steel proof that public spending can be useful. “The punditocracy, or the D.C. mentality, they need to understand that we’re in a very different time,” the administration official said. “This is precisely when you need to run a deficit. You have to actually make these investments in order to get the economy growing again.”
Meanwhile, while Democrats weigh how to respond to a president in their own party asking them to let the government spend more, Republicans have decided the path back to power involves bashing the budget endlessly. One senior GOP aide in the Senate joked recently that they wake up every day knowing what their message is: Obama’s spending too much. And he’s turning the country into something different. Something un-American. Something… French.
“Our budget represents, I believe, what America is really about,” said House GOP whip Eric Cantor, of Virginia, at a breakfast Thursday sponsored by the Christian Science Monitor. “Europeans, I think in general, would tend to bend towards the notion of security in their life, and that’s why perhaps there are such tremendous safety nets, obligations and programs there. In America, we are much more focused on opportunity — providing the safety net for those who truly need it, but on the other hand, making sure that we provide the opportunity to move this country forward by engaging the private sector.”
Other Republican operatives think now is the time for the party to finally prove that they learned the lesson that conservative voters were trying to teach them. “Taxes too much, spends too much, borrows too much is something that resonates,” said GOP consultant Kevin Madden. “The lesson that we learned and many conservative Democrats learned from this last election is that people were fed up with wasteful spending and inefficiency in Washington.”
The only problem with that argument is that John McCain spent nearly every day during the campaign talking about wasteful earmarks — which all barely added up to a rounding error in the overall context of the federal budget — and accusing Obama of Europe-inspired proto-socialism. And look how well that worked for him. What Republicans are up against now is something more fundamental; they’re fighting back, hard, against Obama’s attempt to reshape the way people think about government, the same way Reagan did a generation ago.
“The Republicans, I think, are being very cynical,” Baker said. “They’re happy to run this campaign saying, ‘Oh, this is really poorly thought-out, bad planning. It’s wasteful.’ And if they can throw enough monkey wrenches so that it doesn’t work … we could very well end up in a situation where we don’t get much growth, the unemployment rate keeps rising. And if they get back in power, I’m fairly certain that government investment is not going to be on the top of their agenda.” Obama aides, for their part, won’t even discuss the possibility that the economic programs won’t turn things around.
Voters don’t seem fully persuaded one way or the other. Polls show Obama’s economic policies are still broadly popular — a recent CNN/USA Today/Gallup Poll found 56 percent of respondents approve of the way he’s handling the economy, and 49 percent even approve of the way he’s handling the federal deficit, despite GOP shrieks that all he’s doing is increasing it. Only 44 percent disapprove. But what might matter more is what people think of it all by this time next year. “The ultimate issue is not what do people think today,” said Democratic pollster Mark Mellman. “It’s, How good is the economy as we get to 2010?” If Obama’s approach is right, the White House will have something to show for it by then. And if he’s wrong, the GOP taunting, “We told you so,” won’t be the only problem the country faces.