State of the Union

A few days ago President Obama gave his annual "State of the Union" message.  It was well received by the public and by me.  This is on top of his excellent speech after the Assassination attempt on Rep. Giffords in Tuscon.  And, as I have indicated elsewhere (http://sigma5.blogspot.com/2010/12/negotiation-101.html), President Obama is on something of a roll.  This is all good news.  But it is too soon to tell whether the President and his team have learned the right lessons.  I am still skeptical.

The President laid out a very modest agenda in his State of the Union speech.  All things being equal I would have preferred a lot more.  But all things are not equal so I am happy with the modest proposals he laid out.  But I have been here before.  President Obama is noted for his speaking ability.   He has given many notable and some great speeches.  The problem has been the follow through.

The narrative line from the DC pundits is that he concentrated too much on getting things done and not enough on communication.  There is a lot of truth to this.  Of course, the Republicans are past masters at throwing up noise ("Death Panels", "He is a Socialist who was born in another country", "you lie") to drown out the narrative.  There is good evidence in these early days of the post-election period that the Obama administration has learned the "don't lose track of the narrative line" lesson.  And in his speech he did an effective job at connecting "jobs, jobs, jobs" to his economic ideas of more R&D and education, something he had been less than successful at before.  So on the messaging front there is reason for hope.

But on the "negotiation" front, we'll just have to wait and see if he has made the proper course correction.  It shouldn't take too long.  The "repeal Obamacare" front is a distraction.  The GOP is currently putting a lot of energy into it but polling suggests that the public as a whole wants to move on.  So I expect that this front will consume way more energy than it deserves but that doesn't stop it from being a side show.  The main front is on the economy in general and the budget in particular.

Here I don't think the Republicans have figured out just how little time they have.  There are three major items. In order of when they must be addressed they are:  (1) The budget for the remainder of this fiscal year (April to September). (2) Raising the debt ceiling. (3) The budget for the next fiscal year (fiscal 2012:  October 2011 - September 2012).  Taking them in this sequence:

FY11:  The Federal government is currently operating on a "continuing resolution", funding everything at FY10 levels.  This is a real mess.  Some old programs that have ended are funded whereas new programs that didn't exist in FY10 are unfunded.  Then there are some funding level tweaks up or down for continuing activities that should be made but can't due to the rules of how "continuing resolution" funding works.  This situation is entirely the result of GOP obstructionism in the Senate.  Never the less, the Republicans have about a month to get a real budget for the second half of FY11 in place.

In this time the GOP controlled House needs to create and pass a bill.  Then the "Split but with the Dems still having a slight majority" Senate must approve it too.  Then, if there is any difference between the two bills (the most likely scenario), it must go to a joint House - Senate "reconciliation" committee and both houses need to pass the reconciled version.  Then the President needs to sign it.  And hopefully this is all done by March 1 so that the governmental departments get a few weeks to figure out how to implement it. It is unlikely in the extreme that the GOP will be able to meet this schedule.  And I note in passing that these kinds of last minute budgeting shenanigans result in a lot of "waste, fraud, and inefficiency" the GOP pretends it is opposed to.  We could probably increase the efficiency of and reduce the waste and fraud in the Federal budget by 2-5%, hundreds of Billions of Dollars, just by approving a budget in a timely manner.

On paper the GOP has taken a good first step.  They have made Rep. Ryan the House "budget Czar" (hypocrisy alert - there's just no other way to describe the situation accurately).  Theoretically Ryan can whip something out quickly and, on paper, he can run roughshod over the mandarins that control the various committees that usually deal with each part of the budget.  We will see how this works out in practise.

The GOP has been very careful to promise dramatic budget reduction without being specific.  Theoretically there are specifics, some of them from the esteemed Mr. Ryan.  But these specifics have been glossed over for the most part.  Mr. Ryan, for instance, did not trot out any of these specifics in his official GOP rebuttal to Obama's State of the Union.  He very carefully stuck to "principles" and other generalities.  But, wait!  It's even worse.  Little noted in the press was the fact that many Republicans accused Democrats of "cutting Medicare" during the last election campaign.  This was based on the extremely modest cost saving provisions in Obamacare.  It worked.  The GOP did very well with seniors who thought these Republicans were the defenders of Medicare and Democrats were not.  So these GOP politicians are now on record in the minds of these seniors as protectors of Medicare.  The GOP is NOT the protector of Medicare and one of Mr. Ryan's proposals is to gut Medicare.  And so it goes.

By being fiscally irresponsible while saying the opposite Republicans have put themselves in a bind.  They have gotten away with this contradiction for years.  They ran up huge deficits, most recently under Bush during the 6 years when they had complete control - they controlled the House, the Senate, and the White House.  They have gotten away with this by adroitly deploying their brilliant PR machine.  The media was asleep at the switch as were most voters.  So no one noticed.  And the Democrats were inept at both doing anything about it (understandable given their powerlessness) nor with getting the message out effectively (kudos to the GOP PR machine and the feckless press).

By now it should be obvious what the Obama administration and the Democrats need to do.  Number one on the agenda is to start working together.  I blame most of the past problem on the Obama administration.  They spent all their time and energy on the GOP and a few Blue Dogs and ignored mainstream Democrats, especially House Democrats.  The White House needs to work with and support a coordinated program.  Given their choices, congressional Democrats will support the White House.  But it would be tremendously helpful to their moralle and to their effectiveness if they knew the White House had their backs.  The White House can then stay above the fray while Democrats in congress do the heavy lifting.  The White House must be particularly careful to let the GOP go first on the budget for the remainder of FY11.

The Constitution, so near and dear to Tea Partiers, is on their side.  Money bills must, by constitutional fiat, originate in the House.  Beyond that, the White House can claim justifiably that they already laid out their plans in the budget they submitted almost a year ago.  And they worked with the House and Senate on compromise legislation both in September and December.  The GOP rejected all of this so it's time for the GOP to lay out in public the specifics of what they propose.  I would further propose that, given how hard it is to get anything through the Senate, the White House refuse to comment on what the House GOP comes up with until they have passed a complete bill suitable for Senate action.  And, while the White House is being conspicuously silent, House Democrats would be unleashed to lay into whatever the GOP in the House comes up with.

There are two general approaches the GOP representatives can go with.  They can not try to cut spending in which case House Democrats lay into them for not cutting the budget as promised.  Or they can cut drastically and House Democrats can lay into them for reneging on their promises (if they are foolish enough to cut into Medicare) or they can channel the anger of the supporters of whatever parts of the budget the GOP chooses to cut.  And, if the GOP chooses to hew to some middle ground then Dems go at them from both directions.  Critical to making this work is forcing the GOP to go first.  Will the White House figure this out and actually do it?  That's the question.

Debt Ceiling:  The Debt Ceiling will have to be raised in the next few months.  This can probably be put off until the FY11 budget is passed, assuming the GOP manages to stick to the schedule I have outlined above.  There are a number of Tea Party types that are willing to shut the government down by not raising the limit.  And, again this is a "fiscal" matter so legislation needs to originate in the House.  That puts House GOP members in the hot seat, if Obama and the Democrats play their cards right.  I am pessimistic they will.  But I know what I would start doing if I was the Obama administration.

I would start publicly planning for a government shutdown.  I would start quiet but make sure the story leaks.  Then I would point to various statements by various Republicans and say "we are only trying to be prudent here".  Then the next thing I would do is have House Dems start talking about not voting for any Debt Ceiling increase unless it has broad GOP support.  "They are in charge.  It's their responsibility to govern." would be the message.  The message should also include documentation of the several times GOP members have voted en mass against raising the debt ceiling recently.  Once this is done it should be just a matter of time before the GOP's business allies tell their lap dogs to get in line and make a debt ceiling increase happen.

Finally, there is the FY12 budget.  The budget the Obama administration sends up in a few weeks should reflect what Obama said in the State of the Union.  It should have increased funding for education and R&D.  It should have cuts in the military.  It should meet his promise of keeping discretionary spending flat, something that will be hard to do.  (And "flat" means at the same level as his original FY11 budget proposal).  He should not do the work of the Republicans by cutting except where I have indicated above.  Of course, he could cut programs that are near and dear to Republicans but that is too much to expect.  Let the Republicans take the heat from constituencies for cutting some one's pet spending.  The key to the strategy is to get Republicans on record for unpopular cuts.  And, if they are unwilling to step up and support unpopular cuts then to take them to task for that.  Now a lot of the "bad cop" work can be done by congressional Democrats while the White House stays above the fray.  But for this to work congressional Democrats need to know that the White House has their back.  For the past two years it has been obvious to everyone that the White House did NOT have their back.  That must change.