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On the budget, it's 1995 all over again
The Washington Post, March 6, 2013

The Dow hits 5,000 for the first time. Tom Hanks wins the Oscar for "Forrest Gump." Pete Sampras sweeps his third straight Wimbledon. And Newt Gingrich and Bill Clinton clash over when to balance the budget.

It's retro but true: The budget wars are about to make it 1995 all over again.

Let me explain. Right now Washington is obsessed with the sequester and the blame game and the "continuing resolution" and the next debt-ceiling showdown. And not without reason. Heck, the president is canceling White House tours, so things are tough all over.

But Paul Ryan's new budget, slated to be unveiled next week, will alter the debate in ways no one has prepared for.

To be sure, I expect Ryan's new blueprint to be another exercise in faith-based budgeting, a duplicitous document that pretends once more that taxes don't need to rise as the baby boomers retire and we double the number of people on Social Security and Medicare (though Ryan will quietly bank Obama's recent tax hikes on top earners). It will thus rely on magic asterisks while ravaging government, save for programs serving seniors and defense.

But—and this a big "but"—Ryan's plan will call for the budget to be balanced in 10 years.

This new goal is a game-changer. Until now, Ryan's plans have been regressive, phony blueprints that also mocked all notions of prudence by not reaching balance for three decades. Though he managed to fool the press and even many arbiters of budget sanity into thinking otherwise, Ryan's plans were never fiscally conservative.

Next week, Ryan's plan will still be regressive and phony. But if early reports are correct, it will show on paper a path to balance in 10 years. No matter how magic the asterisks and specious the assumptions, the embrace of this goal will transform the debate.

Why? Because even as Democrats attack Ryan's plans along familiar lines—critiques the press has heard for years now and will find boring—they will be forced to respond to what's new here. Are Democrats in favor of balancing the budget or not? If not, why not? You mean never? And if so, by when?

This is exactly the dilemma Clinton faced in 1995. After Democrats were walloped in the historic GOP sweep of 1994, Gingrich led his troops to offer a plan to balance the budget in seven years. In the face of this assault on his fiscal chops, Clinton wavered. Part of him wanted no part of such a goal. After all, in his original 1993 economic package he'd made some tough, responsible choices to get the deficit under control (including tax hikes on the top 2 percent), and voters had rebuffed him in the midterms. Let the GOP do the heavy lifting for a while, he and his political advisers thought.

At the same time, Clinton's economic advisers told him that balancing the budget in anything less than 10 years would tank the economy (as it turned out, the budget was balanced a few years later and the economy boomed, proving that presidents—and all of us—need to take economists' advice with a hefty dose of doubt).

So Clinton tarried. What he soon found was that it was politically untenable for a president to refuse to embrace the goal of balanced budgets when his opponents do. He'd forfeit a reputation for "fiscal responsibility." He knew voters saw this as a values issue. So after months of vacillating, Clinton overruled his advisers and put out his own 10-year path to balance. (Ten vs. seven, close enough!).

It marked the moment when Clinton went back on offense. He crushed the GOP for seeking balance "the wrong way," killed the Republican brand during the subsequent government shutdown and won reelection handily.

Fast forward to 2013. It's a far worse time for Democrats to be on the defensive on "fiscal responsibility," because the urgent priority should be jobs and growth, not deficit reduction.

But Obama has left himself vulnerable. He's defined his fiscal goal as "$4 trillion in deficit reduction" over 10 to 12 years—a meaningless elite consensus abstraction. The goal starting next week will be a balanced budget. People get that.

And here's the problem. Democrats can't come close to Ryan's goal in a responsible way without raising taxes on people who earn less than $250,000 a year. That's the one thing Obama will never do (sorry, but the president didn't mean it when he said he'd tell us what we needed to hear, not what we wanted to hear). He, like Republicans, will leave that painful truth to a successor.

But if the president, and colleagues such as Patty Murray, who has to craft the first Democratic Senate budget in four years, don't include such taxes, they can't reach balance anytime close to Ryan's timeline. So what will they do? They can say balance isn't important. They can say it is and fudge the numbers in a Democratic answer to the big Ryan fudge. Either way, these questions will expose rifts in the Democratic caucus that could keep the White House scrambling for months, as progressives rightly say we need to focus on jobs and growth, and centrists rightly say the party can't be cast as fiscally irresponsible.

If I'm right about the dynamic that's about to unfold, the verdict that Republicans have been trounced politically by Obama will look premature. Think about it. Apart from Obamacare (a great, if flawed, achievement whose impact still depends entirely on being implemented well), what's the president's legacy beyond having avoided a second Great Depression? Republicans just got 82 percent of the Bush tax cuts made permanent. They're forcing Washington to debate deficits instead of jobs in ways that serve their partisan cause.

What's more, as my colleague E.J. Dionne Jr. shrewdly points out, these endless budget clashes are running out the clock on the affirmative portion of Obama's second term. If you put aside the falsehoods Republicans peddle and the inadequacy of their agenda to America's needs, as a matter of politics, their dominance of the debate is impressive. If this is how a retrograde party in disarray plays the game, who knows what's in store if Republicans get their act together.



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