Obama should be bolder than Brown

In some ways American politics now reminds me of British politics six months or so before the last general election.

Let’s begin with the challenge posed to America’s elites by E. J. Dionne Jr in the Washington Post:

“A funny thing happened to the American ruling class: It stopped being concerned with the health of society as a whole and became almost entirely obsessed with money … The ruling class now devotes itself in large part to utterly self-involved lobbying. Its main passion has been to slash taxation on the wealthy, particularly on the financial class that has gained the most over the past 20 years. By winning much lower tax rates on capital gains and dividends, it’s done a heck of a job … And you wonder where the deficit came from. If the ruling class were as worried about the deficit as it claims to be, it would accept that the wealthiest people in society have a duty to pony up more for the very government whose police power and military protect them, their property and their wealth … Where are those who will now take up this banner?”

The answer, it would seem, is resident in the White House but on the road. The Post also reports:

“President Obama will hit the road this week and forcibly deliver his message that a combination of spending cuts and tax hikes on the rich is necessary to rein in the nation’s rocketing debt — a high-stakes effort to rally public support ahead of a series of contentious budget battles in Congress. From Northern Virginia Community College in Annandale to Facebook’s headquarters in Silicon Valley, Obama will make a series of campaign-style stops in an effort to block a Republican plan that would reduce the deficit by dramatically changing Medicare and reducing spending on education and other social programs.”

I don’t think this strategy is really such a big risk for two reasons.

First, the Republican plan from Paul Ryan is absurd. The more it is debated the less credible it will appear. As Robert J. Samuelson notes:

“He achieves big savings by assuming deep cuts to most of the federal government beyond Social Security, Medicare and Medicaid. Ultimately, it would shrink to almost nothing. That’s defense, food stamps, highways, federal courts, basic research . . . and much more.”

Second, the polling evidence suggests that the principles behind Obama’s approach to deficit closure are popular. The Post reports:

“Polls show that Obama has work to do on the deficit but that many Americans agree with his broad approach. In a Washington Post-ABC News poll in mid-March, 55 percent of respondents disapproved of his handling on the issue, with 39 percent approving. But, playing to Obama’s advantage, only about a third of Americans prefer a “cut only” approach to the deficit; nearly two in three say spending cuts and tax increases should be included.”

So in taking up the challenge set by Dionne Jr Obama is providing the tax element that two thirds of Americans want to see. However, Samuelson is right to point out that this element on its own is not enough:

“We won’t make much progress until (a) Democrats concede that spending control requires genuine cuts in Social Security and Medicare, which now total $1.3 trillion annually and represent 35 percent of federal outlays; and (b) Republicans acknowledge that, even after significant spending cuts, tax increases will be needed to balance the budget. Last week, there was little sign of either. President Obama rebuffed Social Security and Medicare cuts. Most Republicans held fast on taxes.”

The evident impracticality of the Ryan plan means that Obama can convincingly win this key debate. But to do so he has to be prepared to do what Gordon Brown was so unwilling to do six months or so out from the general election: talk about cuts.

Brown’s unwillingness to do this meant that the economic debate in the general election reduced to a debate about whether or not to begin deficit reduction in 2010 (Labour said “no”; the Tories said “yes”; and the Lib Dems said “no” in the campaign and “yes” in government). A wider debate about the deficit would have better suited Labour. It was apparent by the end of 2009 that significant cuts over the next parliament would be necessary. Gordon Brown could have presented himself as a sensitive surgeon to the public services Labour had cultivated, in contrast to the brutal destroyer that David Cameron would amount to (and is now proving to be).

The Post reports:

“The Treasury Department has concluded that the $14.3 trillion debt ceiling will be breached next month and will have to be raised by early July. Republicans want legislation to reduce government spending to be part of the vote to raise the debt limit; the Obama administration has said that further deficit reduction is needed but that the issues should not be joined.”

I wonder whether there is a case for Obama calling the bluff of Republicans on this and going where Brown feared to tread. By being prepared to introduce such legislation Obama would close off the Republican attack that he has no plan for closing the deficit. Once this attack is closed then scrutiny will increasingly fall upon the inadequate Ryan plan and support for the mix of tax increases and spending cuts proposed by Obama will translate into support for the President. Taking the bull by the horns in this way is the stuff of the radical centre and bold leadership. This translates into the colour purple on both sides of the Atlantic.