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Analysis: Politics trumps policy in Obama budget

By Alan Silverleib, CNN
updated 3:48 PM EST, Mon February 13, 2012
President Obama talks about his 2013 budget at Northern Virginia Community College in Annandale, Virginia, on Monday.
President Obama talks about his 2013 budget at Northern Virginia Community College in Annandale, Virginia, on Monday.
STORY HIGHLIGHTS
  • Obama's budget plan won't pass Congress but reinforces his campaign narrative
  • Obama is pushing higher taxes on the wealthy, a key campaign theme
  • The president doesn't make politically tough choices on popular entitlement programs
  • GOP nominee also unlikely to take bold stance on changes to programs like Medicare

Washington (CNN) -- A piece of advice: If you're worried about President Barack Obama's budget, find something else to fret over. The president's blueprint has about as much chance of becoming law as yours. It's all about election year 2012, not fiscal year 2013.

Don't take my word for it. Take Harry Reid's. The Senate majority leader -- the Democrat most responsible for moving Obama's agenda through Congress -- said Friday that there's no need to bring the budget to a vote this year.

"It's done. We don't need to do it," Reid said, citing spending outlines agreed to in August's debt ceiling agreement.

This isn't shocking news. It's been more than 1,000 days since the Senate passed a formal budget. Washington governs today by lurching from one fiscal crisis to the next. Budget plans are about drawing clear political and ideological lines between Democrats and Republicans.

Obama unveils $3.8 trillion budget

Voters are now less than nine months away from deciding whether Obama will have a second term. He wants to make sure you know where he stands -- sort of. His $3.8 trillion budget, like those of Democratic and Republican predecessors alike, shines a light on what he considers to be his most popular tax and spending proposals while blurring politically painful choices that will ultimately have to be made to right our debt-laden ship of state.

GOP: Obama budget 'debt on arrival'
Obama: Budget requires 'tough choices'
Obama: Keep progress on track

Start with taxes. Obama's plan hikes taxes on the wealthiest Americans to the tune of roughly $1.5 trillion. It ends the Bush-era tax cuts for families making over $250,000 annually while enacting the so-called Buffett Rule, requiring households earning more than $1 million to pay at least a 30% rate.

The name of the game is shared sacrifice. The GOP-controlled House won't play along. But you should expect to hear a lot more about it, especially if Mitt Romney wins the Republican nomination. Romney, worth as much as $250 million, pays an effective tax rate of approximately 15%.

Obama also hits a populist note by going after Wall Street fat cats. Remember the incredibly unpopular bank bailout? The administration's budget includes a "Financial Crisis Responsibility Fee." The tax would raise $61 billion over the next decade from large financial institutions to help offset both the cost of the bailout and Obama's mortgage refinancing program.

Assuming Republicans remain dead set against any new taxes this fall, Obama will try to hang Wall Street around the GOP's neck.

The second key theme of Obama's budget: jobs now, deficit reduction later. No president since Franklin Roosevelt has won re-election with unemployment over 7.2%. The jobless rate is currently 8.3%, but it's going down. Obama wants to do everything possible to keep accelerating the current trend -- and get credit for doing so from the voters.

In keeping with that hope, the administration is proposing to spend billions on infrastructure, education and domestic manufacturing. Among other things, Obama's budget includes $30 billion to modernize schools, along with another $30 billion to hire and retain teachers and first responders.

It also includes an extension of long-term unemployment benefits and the current payroll tax cut, something Congress is expected to take up this month.

"Congress needs to pass an extension of the payroll tax cut and unemployment insurance without drama and without delay and without linking it to some other ideological side issues," Obama declared Monday morning. "The time for self-inflicted wounds to our economy has to be over. Now is the time for action."

Now is not the time, however, for new details on deficit reduction. Obama promised to cut the deficit in half by the end of his first term. That won't happen. The deficit was roughly $1.4 trillion in 2009. The White House says it will be about $1.3 trillion this year and $901 billion in 2013.

The administration blames George W. Bush for the mess and insists that the deficit will steadily decline as a percentage of the total economy over the next decade. Critics dismiss White House projections, however, arguing that they're based on faulty growth assumptions and vague promises of future spending reductions.

Specifically, critics have blasted the administration's use of $850 billion in budget "savings" from the end of the wars in Iraq and Afghanistan, calling the move an accounting gimmick. They also say Obama's budget doesn't do nearly enough to control the explosive growth in politically popular entitlement programs.

Money matters and the military

Obama's plan outlines $360 billion in Medicare and Medicaid reductions, but those cuts come primarily to providers and don't address long-term problems tied to America's aging work force.

Former GOP New Mexico Sen. Pete Domenici and former Clinton budget chief Alice Rivlin, co-chairs of a bipartisan debt reduction task force, warned Monday that the "real problem" with the debt begins after the next decade "as entitlement costs spiral out of control and revenues are inadequate to deal with a wave of retiring baby boomers."

Republicans were more blunt.

"In a time of record debt, America should be spending less," said Republican National Committee Chairman Reince Priebus. "Obama's hypocrisy has taken a devastating toll on our country. The mountain of debt weakens our economy and threatens our children's future."

House Appropriations Committee Chairman Hal Rogers, R-Kentucky, said Obama's proposal "falls exceptionally short" on entitlement spending reform.

For his part, Obama insisted Monday that "we can't just cut our way into growth." But over the long term, he said, "the truth is, we are going to have to make some tough choices in order to put this country back on a more sustainable fiscal path."

Don't expect the truly tough choices to be outlined by either Obama or his Republican opponent this year. Conventional wisdom says that doing so would be political suicide, and the electoral stakes are too high to challenge that belief.

CNN's Tom Cohen and Charles Riley contributed to this report.

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