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Deep cuts hinder Barack Obama’s fiscal goals for 2nd term

President set to lock in deep reductions he described as ‘dumb’

By Zachary A. Goldfarb
Washington Post

WASHINGTON With his signature this week, President Barack Obama will lock into place deep spending cuts that threaten to undermine his second-term economic vision just four months after he won reelection.

Obama has repeatedly championed a set of government investments that he argues would grow the economy and strengthen the middle class, including bolstering early childhood education, spending more on research and development and upgrading the nation’s roads and railways. He has said his comfortable election victory in November shows the country is with him.

But none of those policies have come close to being enacted. Instead, after returning this weekend from a trip to the Middle East, Obama is set to sign a government funding measure that leaves in place the across-the-board cuts known as sequestration – a policy that undermines many of the goals he laid out during the 2012 campaign.

Obama thinks the cuts are, in his words, “dumb,” and says they will slow the economy and harm priorities by cutting spending on education, research and development and many other programs.

Yet Obama now finds himself enacting a broad domestic policy that he doesn’t support and that he believes will harm the country.

“What he got in terms of the sequester is clearly incompatible with his investment plans,” said Jared Bernstein, a former White House economic adviser.

Obama is in this predicament after failing to persuade congressional Republicans to agree on a plan of tax hikes and more targeted spending cuts to replace the sequester. The president misjudged his GOP opponents, who have held firm in opposing more tax increases and, so far, have decided to stomach the sequester cuts.

House Republicans, who passed a budget last week with even deeper domestic spending cuts than the sequester, say Obama should be able to manage the government with significantly less spending.

“We want to restrain spending. They want to spend more,” House Budget Committee Chairman Paul Ryan, R-Wis., said last week after passing the House budget. “We think taxpayers give enough to Washington.”

‘Not in the right direction’

One of the clearest examples of Obama’s dilemma is early childhood education, a centerpiece of his State of the Union speech in February.

Obama has proposed offering preschool to all 4-year-olds from low- and moderate-income families, which research suggests would help move children up the economic ladder.

The idea isn’t cheap. Steven Barnett, the director of the National Institute for Early Education Research at Rutgers who was consulted by the White House, has estimated it could cost up to $10 billion a year.

Rather than raising new funds to pay to expand early childhood education, however, Obama is now being forced to slash it. The sequester this year will cut about $400 million from the Head Start early childhood education program, which will mean that tens of thousands of poor children would lose access to it, according to the administration.

“It’s not in the right direction, and it is disappointing,” Barnett said.

The administration never expected the sequester to happen, a former official says, and Obama himself said during a debate last year that it would not occur.

White House officials had judged that deep defense cuts included in the sequester would move Republicans – who had warned loudly of risks to the Pentagon – to embrace an alternative, as they did in a Jan. 1 tax deal that delayed the cuts for two months.

Obama has proposed changes to Medicare, Social Security and other programs to generate savings, as well as scaling back hundreds of billions of dollars of tax breaks that benefit the wealthy and corporations.

Republicans oppose any new taxes.

Obama could have forced a confrontation over the sequester, threatening to shut down the government if Congress insisted on the spending cuts.

He chose a different strategy, avoiding an immediate fiscal crisis while encouraging Congress to spend several months on its own trying to find a solution.

Bearing the blame

Historians note that presidents sometimes get what they want – as Obama did with health care reform – or they are rebuffed, as George W. Bush was in attempting to privatize Social Security. But rarely do presidents find themselves enacting major policies to which they are fundamentally opposed.

Lawrence Mishel, president of the liberal Economic Policy Institute, said Obama shoulders part of the blame. Since 2010, he said, Obama has spent too much time focused on the debt, including agreeing to significantly shrink domestic spending as part of his own budget proposals.

“I think they brought it on themselves to the extent that they validated the deficit issue,” Mishel said. “It was always the case that the actual budget policy being pursued contradicted the rhetoric in the campaign. Now it’s even worse.”

White House officials say they will continue to press forward on proposals that would not require new federal funding, such as raising the minimum wage, opening manufacturing institutes, revamping housing policies and overhauling immigration laws.

“The reality is that the president’s economic vision is broad and his economic strategy is calibrated to try to make progress on a number of fronts,” said Brian Deese, a top White House economic adviser. “There is no reason why we can’t work on issues where there is and has been bipartisan support in the past, and the existence of the sequester today shouldn’t stop that.”

Advisers say they say also won’t give up on replacing the sequester, rejecting the notion that it will be permanent.

The budget measure expires at the end of the September, and another battle is already brewing for the summer. Obama will continue to nurture relationships with Republicans who might be willing to compromise.

“The president has already got public opinion on his side. He’s got an election on his side,” said Ben LaBolt, a Democratic strategist who was the spokesman for Obama’s reelection campaign. “Now he has to go get a separate set of votes.”

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