As his 2012 re-election campaign wound to a close, President Obama was unequivocal regarding his first priority for a second term. “There’s no doubt that our first order of business is going to be to get our deficits and debt under control,” he told msnbc's Morning Joe in late October.
He emphasized his commitment to deficit reduction again in his post-election victory speech, putting "reducing our deficit" at the front of a list of priorities which also included "fixing our immigration system" and "freeing ourselves from foreign oil."
Despite what progressives might hope for and conservatives may fear, deficit reduction is hardly a sweeping, transformational goal. It also might not appear as intuitively urgent as some of the other line items on the president's agenda, such as upgrading America's crumbling infrastructure or mitigating the effects of catastrophic global climate change. But the president has an answer to any supporters who are baffled by his fixation on belt-tightening and budget-balancing.
"There’s a forcing mechanism," he said in his Morning Joe interview. "You know, the Bush tax cuts end at the end of the year. We know that we’ve got the sequester looming.”
The sequester is a series of timed budget cuts which will automatically kick in at the beginning of next year unless Congress prevents it. These cuts, along with the Bush tax cuts and various other tax and budget provisions set to expire soon, form what is known in Washington as the fiscal cliff: a "huge fiscal contraction" which will occur as those policies expire.
Though research by the Center on Budget and Policy Priorities (CBPP) has suggested that the "cliff" metaphor is misguided—it's actually more like a gradual slope—CBPP Vice President James Horney told msnbc that it should still be averted. "Virtually nobody thinks all the policies there are the right ones, are the way to go," he said of the fiscal cliff. Instead, the policies set to expire should be replaced with a menu of other budget measures which will address the government's longer-term deficit concerns.
"While economists have a lot of different opinions about how large a debt is acceptable and what we ought to do now, and so on, there is virtually unanimous agreement you can't have a permanent situation where deficits and debts continue to grow relative to the size of the economy," said Horney.
Following his decisive victory in the 2012 election, Obama "has the most leverage he's going to have" to hammer out a reasonable budget with House Republicans and "stabilize the deficit relative to the GDP by the end of the decade."
But Brooklyn College political theorist Corey Robin believes that Obama's focus on deficit reduction amounts to "austerity politics," and will lead to deep, regressive cuts in social welfare spending. "I think [Obama] is part of a class of people within the Democratic Party who really do believe that the system is broke, that we don't have enough money, and old people are going to have to take it on the chin," he said.
The president has already hinted, Robin said, that austerity could be returning to America's shores in full force. "He was signalling he felt like the sequestering was going too heavily after cuts in the Pentagon budget," said Robin. "So he's calling for raising taxes in combination with not cutting the Pentagon, and also with cutting entitlement programs."
If Obama proposed significant entitlement cuts as part of a budget deal, it would not be the first time. During the debt ceiling showdown of 2011, he reportedly offered to raise the Medicare eligibility age by two years, essentially announcing his intention to give the Republicans a free social welfare cut.
According to Robin, concessions like that would be worth little, because the Republicans would use their next stint in the White House to spend America's way back into the deficit hole. In recent history, he argued, whatever revenue Democrats manage to raise "for the sake of deficit reduction, when they've left office, does not go either to that project or to other projects" that their party supports, such as stabilizing Social Security and Medicare. "What the Republicans do is give it back in the form of tax cuts, and they're very conscious of why they do it, which is that if it's spent, it will be on something they do not want."
Horney was more sanguine regarding the chances of a sustainable deal, and said there were plenty of other opportunities in the budget to raise revenue. For example, he said, "virtually all tax experts and tax economists agree on" eliminating tax expenditures like the mortgage interest deduction. Additionally, he said, Congress should look at implementing a consumption tax and a carbon tax.
In a press conference on Wednesday, House Speaker John Boehner said he was willing to work with the president on a budget deal, and expressed his support for a "fairer, simpler, cleaner tax code." However, he added, "The president must be willing to reduce spending and shore up entitlement programs, which are the primary drivers of our debt."