Obama, GOP Vie For Upper Hand On Budget Cuts

Washington will participate in an annual ritual Monday when the White House unveils the budget for the next fiscal year, but Republicans have a very different plan.

Budget expert Stan Collender has watched many budget fights unfold in Washington, but never one with so many high-stakes deadlines.

"The president's budget comes out and then, in very short order, the government's funding is going to run out," he says. "If Congress and the president don't somehow agree on the next level of funding, the government's going to shut down by March 5. And then, as soon as that's over, the government's going to reach its debt ceiling.

"We're going to have to deal with all the same issues over and over again. This year's budget debate is going to feel a little bit like the movie Groundhog Day."

The First Step

President Obama takes the first shot Monday in what will be an epic battle over the size and scope of the federal government.

"We're going to be presenting a very clear picture of what investments are needed, where the belt tightening needs to happen," says White House Budget Director Jack Lew. "This is our plan; that's the first step in a budget process."

The president's opening position is that domestic spending should be frozen for five years at 2010 levels. House Republican leaders want to go back to 2008 levels. They are being pushed by Tea Party conservatives to cut spending even more deeply for the remainder of this fiscal year.

"We are working with our members and our committee chairmen to make sure that this cut is as big as possible to send a signal that we're serious about cutting spending here in Washington," House Speaker John Boehner (R-OH) said Thursday.

Both parties are tripping over each other to convince voters they are making a real dent in the budget. The White House budget even cuts in half a program sacred to Democrats: low-income heating assistance.

Lew says the president's budget will make other difficult cuts.

"Taking the Community Services Block Grant and cutting it in half — that's going to be a very serious reduction of dollars available, and it's going to create a different reality for many community-action agencies," he says. "I think the question is, as much as whether there are spending reductions, is are we doing deficit reduction? And I think our budget will show a clear path that we are committed to doing deficit reduction."

A Small Dent

Most of the president's deficit reduction will come from letting tax cuts for the rich expire in 2013. But Collender points out that real deficit reduction isn't on the table. Both the White House and Republicans are only tackling domestic nondefense discretionary spending — a mere 10 percent of the federal budget.

"That is the ultimate irony here and the biggest frustration for any of us who watch the budget very closely," Collender says. "The truth is, though, that they're talking about cutting a very, very small part from a very small part of the budget.

"Until people start talking about Social Security, Medicare, agricultural price supports and revenues, this deficit's going to be high for a while."

Lew acknowledges that the president's budget is only a down payment.

"It will show a path toward bringing the deficit to a point that we can stabilize it," he says. "But it's not going to go the whole way. It's not going to deal with the broader, longer-term issues of dealing with all of the generational issues that come with the retirement of the baby boomers."

Dealing with those long-term entitlement issues is hard, and the president has been reluctant to embrace any of the specific ideas laid out by his deficit commission. There's a reason for that, Lew says.

Working Together

"We've seen over the last decades that it's rarely the case that progress is made in those areas by having one side or another go forward with a bold unilateral initiative," he says. "The president extended in the State of the Union a serious willingness to work together on a bipartisan basis. So it's not so much waiting as it is the moment of working together has to come."

For the White House, that moment hasn't come yet. Lew says the president won't wait too long to jump-start big bipartisan deficit negotiations, but he says the process has to unfold first. House Republicans have to see if they can pass a budget, and everyone has to see if voters are willing to do more than just cut someone else's benefits.

But this week the president got a warning about the danger of waiting too long to lead: While his State of the Union address was phenomenally popular, and his overall approval ratings are up, the latest Gallup poll showed 68 percent of the American people disapprove of how he's handling the federal budget deficit.