Last August, at the Democratic National Convention in Charlotte, I sat in on a meeting between several top current and former Obama officials and a few dozen executives whose support they were trying to enlist in the upcoming fight over the fiscal cliff. (The terms of my being allowed in the room were that I not publish anything until after the election.) Much of the meeting was given over to a question-and-answer session, and one of the first questioners wanted to know why going over the cliff would be such a bad thing. It would, after all, achieve the tax increases Democrats were seeking.
Jon Carson, a top White House official, replied that the $1.2 trillion sequestration cuts that were part of the fiscal cliff worried him and other officials. Not only the cuts to social programs, but also the cuts to the military budget. “They’re too deep,” he said. Although sequestration was delayed until March 1, those cuts ultimately were not averted. The Pentagon budget will be cut by $500 billion over the next decade (an additional $100 billion in deficit reduction comes from interest savings). While it may have troubled the White House, many Democrats regarded this as a huge gift—military cuts were something many of them desired but few would actually argue for. Sequestration delivered more than they could have imagined.
Guess what? The White House still doesn’t like those cuts. And Obama’s new budget, released today, makes this clear. Although the White House doesn’t advertise this fact in the six-page budget overview it put out this morning, the new budget eliminates nearly all of the cuts that sequestration imposes on the Pentagon. Instead of $500 billion in cuts, Obama proposes only $100 billion, and you have to look closely to spot it (“$200 billion in additional discretionary savings, with equal amounts from defense and nondefense programs”).
Along with the well-advertised cuts to Medicare and Social Security benefits, this is something that should appeal to the GOP. “It’s another one of the peace offerings in Obama’s package to Republicans,” Robert Litan, the director of research for Bloomberg Government and a former official of the Office of Management and Budget, told me. Indeed, when you cut through all the numbers, Obama and House Republicans are only $100 billion apart (the GOP budget restores the full $500 billion). The catch is that, like the other peace offerings, restoring the Pentagon’s budget is contingent on Republicans agreeing to further tax revenue.