Is Obama Going For Broke In Washington's Fiscal Fight?

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Is Obama going for broke in Washington's fiscal fight? The president's non-negotiable stance in the ongoing battle over federal spending and the debt limit's increase may be more than mere bargaining bravado. It may be the realization that without a major win here, his administration has little left to lose.

It seems strange for this Democratic president, reelected with the largest popular vote percentage since FDR, to feel cornered so early into his second term. Yet the last time Obama faced Congressional Republicans in a debt limit fight, he lost enormously.

In August 2011, the administration acquiesced to $2.1 trillion in deficit reduction in exchange for an increase in the federal borrowing authority. It was comprised of $900 billion in immediate spending cuts, followed by negotiations to produce the remainder - which in turn were backstopped by automatic spending cuts if negotiations failed.

The threat of sequestration was supposed to drive negotiators to the table. While it did, it did not drive them to a deal. So the cuts took effect this year. The White House was stunned. Now sequestration has produced a lower spending baseline from which the president has been unable to escape and looks unlikely to evade during his remaining time in office.

The White House knows it cannot have a repeat - either of that level of spending cuts or political defeat. So it is seeking to preclude both by stopping negotiations before they start this time. Rather than losing them in the end, better to win them in the beginning by avoiding them altogether.

However the roots of the administration's non-negotiating stance may run deeper than just that last defeat. It is not just a repeat of the past it must avoid, but a continuation of the present.

It may have been a long time coming, but Obama may finally realize that Republicans are not just posturing in their opposition to Obamacare. The law is deeply unpopular - recording double-digit disapproval margins over its approval in virtually every poll. All this is before its actual implementation.

A law of this size and scope is bound to have "glitches." And this one is already having more than its share. For this reason, implementation of its mandate on business has been delayed a year. The upshot is that the law is more likely to become more unpopular - and the president with it - than popular.

And Obamacare is hardly the worst of the administration's PR problems. According to a Bloomberg News national poll released 9/25, Obama's approval rating on the economy is negative, with 38% approving to 56% disapproving. On the federal deficit, it is -32% (29% to 61%). On the recent Syria sidetrack, his rating is 31% - 53%.

With such negativity, it is miraculous that Obama's overall approval rating was only 4% negative - 45%-49%. Nonetheless, the president's second term appears stillborn.

None of the initiatives from earlier this year are still moving or likely to do so. The economy continues sluggish, now in its fifth year following the recession. The last new factor on the scene was Syria, and that was a debacle for the White House. An escape to foreign affairs, often a refuge for administrations, does not appear likely here.

The administration faces extreme (and to its mind, extremist) opposition in Congress. It is clear that nothing the administration wants is likely to move over the next three years. Historically, the president's party generally loses seats in midterm elections - particularly second midterms - so the president's legislative situation is only likely to worsen. Should it do so, the president's political fortunes and popularity are sure to follow.

In sum, there appears to be no variable that will change the chessboard. If it is to change, the White House will have to move the pieces on its own. The president's only hope appears to stake everything on a single move.

In this case, it appears the move is to goad Congressional Republicans into a dramatic loss in a high-profile - and ideally prolonged - budget battle. That means a shutdown or worse, default, to discredit his opposition - in his best case scenario, to such an extent that he reverses the trend of normal midterm losses and the rapid decline of second term presidents' political relevancy.

With his second term initiatives dead early, fighting a continuous rearguard action on his signature achievement, anticipating the loss of additional Congressional seats, and with lame duck status just over a year away, the White House may see little to lose by betting large. If so, America could find itself with quite a lot to lose, as this budget fight gets nastier, longer, and more dangerous than anyone anticipated.

J.T. Young served in the Treasury Department and the Office of Management and Budget from 2001 to 2004, and as a congressional staff member from 1987 to 2000. 

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