Budget

New governors in Wisconsin, Ohio, Florida, and New York are making headlines by launching front assaults on public employee unions. They argue that there's no way to balance the budget without taking on government workers

California and its new governor appear to think differently.

Here's how it could happen: After a lot of harrumphing, the two parties agree that the fiscal situation has to be fixed and what should be achieved as a prerequisite for increasing the debt ceiling (though not necessarily how to do it). Let's say they agree that until a plan is passed to reduce the debt to 60 percent of gross domestic product by the end of the decade and stabilize it thereafter, the debt ceiling is increased only in three-month increments. So, no more punts.

Who says Democrats and Republicans are divided over how to fix California and its state budget? The recent rhetoric from right and left suggests we have a consensus on a way forward:

The people of California need to be punished more.

That is, the public needs to feel much more budget pain, firsthand, before they’re willing to make and accept the tough choices necessary for budget balance.

The emerging media and political narrative around the Brown budget plan puts the blame on legislative Republicans. Why won't they play ball? Why won't they fall in line? Why don't they support tax hikes - or at least putting tax extensions on the ballot?

The answer is: they don't have any reason to do so.

Republicans, in opposing taxes in any form, are doing what they were elected to do.

President Obama released his budget proposals for FY 2012 this week. As a policy guy, this is normally a day that I anticipate with glee. This is when the governing administration unveils its priorities and describes the latest thinking on how to achieve its goals. Funding levels are proposed and new initiatives are rolled-out, all packaged together with some thoughtful rhetorical framing. But, this year, the politics of the budget process are taking much of the fun out of the exercise.

I strongly believe that the federal government needs to realign its fiscal policy for the long-term. I’d like to see health care costs brought under control and additional sources of revenue accessed (by taxing in some combination gas, carbon, financial transactions, or value added). Having worked in government, I also know that there can and should be spending cuts. Some programs are ineffective in meeting their goals or are poorly designed and administered. Others are giveaways to special interests. There should be an agenda for increasing government performance, accountability, and making sure resources are raised and deployed effectively. These are issues for the long term. Right now, the economy’s performance is dismal, aggregate demand is weak, and families continue to face real hardships. This is not the time for spending cuts that potentially deflate the economy and remove social protections.

The Obama team doesn’t agree. They have offered up a budget that holds the line in many areas and proposes significant cuts in a number of domestic policy areas. The administration is emphasizing how these cuts are being used to increase investments in education, infrastructure, clean energy, and basic research that have the potential to pay off down the line. This has been called, accurately, a “cut-and-invest” budget.

For a number of reasons, this may prove to be a successful political strategy. Namely, it will force Congressional Republicans to offer up additional cuts to demonstrate that the administration has not gone far enough. Obama will be poised to ask the country whose vision of government they like better. He’s hoping the Republicans will look draconian and he will look responsible. Of course, Congress can decide to add back spending by their own volition. Do they really want to sign off on that cut to help seniors pay for their heating bills? Maybe they will add back some money during the next supplemental “emergency” appropriation, perhaps they won’t. The bottom line is that while both the President and the House GOP are talking about cuts, he decided to use his budget as an opportunity to lay the groundwork offering voters a clear contrast.

That contrast is highlighted by the President’s call for “investments” and increasing our commitments to education, research, and infrastructure projects (and yes, early education should be considered an investment and not just child care). While I’m not crazy about their “win the future” slogan, there are large upsides to increasing those expenditures that will generate healthy returns over time.

However, in the short term, I’m concerned about how some of the cuts will disproportionally impact lower-income families.

Will this be the year that Congress takes after the defense budget, seeing it not as holy writ laid down by an unchallengeable priesthood but rather as a political document hammered out by competing bureaucracies, each with long-standing vested interests?

It's a bubbling brew out there, the Tea Party Republicans keen to slash any and all federal programs, joined in a potential alliance of convenience with liberal Democrats seeking to kill big-ticket weapons slammed as pork-barrel waste or Cold War antiques.

President Obama is right when he says that public investments need to be a central part of the nation's economic growth and innovation strategy. Perennial short-termism has left the investment area of the budget dangerously under funded.

Unless we change course with well-targeted investments in human capital, infrastructure and basic R&D, our economy will be left at a severe disadvantage down the (crumbling) road.

Three things are worth emphasizing about the $78 billion in Pentagon budget cuts that Secretary of Defense Robert Gates is ordering over the next five years.

First, it's not really a cut. Rather, as Gates acknowledged in the press briefing he held on the subject Thursday afternoon, it's a reduction from the sum that the military had planned on spending over the next five years. And, even so, each year's budget will still be at least a little larger than the budget of the year before.

Anyone looking for serious fiscal leadership from President Obama in his State of the Union Address could have been nothing but disappointed.

He had the right narrative: jobs, investment, competitiveness and fiscal responsibility. But when it came to leadership on actually fixing the fiscal situation -- the hard part, as opposed to soft and fluffy wordsmithing -- there was none to be found.

Why was Gov. Jerry Brown's state of the state speech so short? I don't know. Perhaps he didn't feel California deserved anything more. The address felt like a slap in the face. Republicans got the open hand for refusing to consider tax increases (or even give the public a chance to vote on tax increases).  Democrats and interest groups got hit for refusing to identify alternatives to cuts they oppose.