Not partisan thaw, but Obamacare fallout behind the budget deal

J.T. Young | Former Treasury Department and OMB Official

Reports that Congress’ recent budget deal boosts prospects for Obama’s agenda are very premature. Congress struck its deal for reasons very different than a partisan thaw. In reality, this deal was due more to the mounting fallout from Obamacare than from the parties’ desire to work together.

White House spokesman Jay Carney recently said, “it’s not a huge step, but an important step forward in what we believe can be done if both sides address these challenges.” You can’t blame the administration for trying to seize on Congress’ mini-budget deal. When you are grasping at straws, they all resemble olive branches.

And the White House has every reason to grasp. By all accounts, the president’s miserable 2013 is not just getting worse, it’s getting ready to spill into 2014. However, just because the administration wants to hit the reset button on its second term, does not mean that “the little deal that did,” can become “the little engine that could” and get the White House past its political problems.

The recently-announced budget deal was admitted by all to be small. Just how small is clear from last year’s budget. In fiscal year 2013, federal spending totaled $3.5 trillion and the deficit, $680 billion. The Congressional budget deal amounted to a reduction of one type of federal spending (direct) and an increase in revenues, totaling $85 billion, and a $62 billion increase in another type of federal spending (discretionary), for a net deficit reduction of $23 billion over ten years.

Small as it was though, it was something Congress had been unable to do – and it prevents another government shutdown for the next two fiscal years, without a tax increase.

So how and why was it done?

Neither party emerged unscathed in the last fiscal showdown. According to Rasmussen polling, Republicans went from down 4 percent in the generic ballot question, on the day the shutdown began, to down 7 percent on the day the government reopened. Obama’s approval/disapproval rating went from +7 percent to -2 percent, over that same period.

Into the wake of the fiscal showdown, came Obamacare’s fall-down. Since then, it has completely eliminated Democrats’ generic ballot advantage (Rasmussen showed the parties 40-40 percent on 12/16) and further deepened Obama’s approval/disapproval gulf (Rasmussen showing it at 46/53 percent on 12/23).

Republicans had every reason to not want to revisit a fiscal fight and every reason to keep the focus on Obamacare. Democrats, while they must yearn for a return to the halcyon political days of a government shutdown, could not risk rolling that dice again – when Obama’s weakened state might well mean a different outcome this time.

As a result, the recent budget compromise was not so much internally proposed, as it was externally imposed.

None of the items offer Republicans anything near the political opportunity already before them on Obamacare. And nothing that Democrats can do unilaterally, offers them anything like the chance to change the subject from Obamacare.

In contrast to where Republicans stood in the last fiscal standoff, Democrats cannot simply end this crisis. Right now it just keeps coming and coming and coming, with no end in sight.

The irony of the parties’ recent role reversal is profound.

Republicans ostensibly waged the battle over fiscal policy, in order to fight Obamacare indirectly. Now that they have the opportunity to fight Obamacare directly – a situation they want desperately to maintain – they do not need to take another tilt at the budget windmill.

Democrats who were then fighting for Obamacare indirectly, while directly fighting over the federal budget, now find themselves directly fighting over Obamacare – a situation they would desperately love to undo.

Like it or not, the climate of Washington’s present and foreseeable future will be determined by Obamacare – not Obama’s agenda – and its failure or success alone will determine when this dynamic changes. To paraphrase Mark Twain, despite Congress’ small budget success, the health of Obama’s agenda has been greatly exaggerated.

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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