Analysis: Democrats relieved Obama unveiling deficit plan

WASHINGTON Tue Apr 12, 2011 7:16pm EDT

WASHINGTON (Reuters) - President Barack Obama's deficit-reduction plan, set to be unveiled Wednesday, was suddenly scheduled this week to quell growing Democratic fears that Republicans were dominating the debate over government spending and debt.

Although White House officials said Obama's plan to tackle the country's skyrocketing levels of debt has been in the works for months -- and that the president was always going to unveil it in the spring -- the sudden announcement of the speech three days ago took Democrats and Republicans by surprise.

Officials familiar with the White House's thinking also said that Obama had wanted to wait until the Republicans had unveiled their own deficit-cutting plan, which they did last week, before entering the fray himself.

"This is an opportunity to use the bully pulpit to frame the choice rather than let the debate run away from them," said Chris Van Hollen, the top Democrat on the House of Representatives budget committee.

Van Hollen said the speech was designed to help lay the ground for getting Congress to raise the debt ceiling above its current level of $14.3 trillion. "To the extent the president can frame the issue for the country, the better we will be in avoiding an economic train wreck."

Democratic congressman Tim Ryan said he was surprised by the announcement of Obama's speech, because he had been given no indication by the White House that it was coming, despite being a member of the House Budget Committee.

"But it was a pleasant surprise, because the president needs to come out and make a stand here," Ryan said. "Quite frankly, he needs to frame the debate the way the Democrats need it to be framed. "He's got to deliver Wednesday."

Administration officials, who lambasted a Republican plan unveiled by congressman Paul Ryan last week, say Obama will propose tax increases on the wealthy, cuts to the Medicaid program for the poor and the Medicare program for the elderly and changes to Social Security to reduce the deficit.

Obama's proposal will be based on a bipartisan deficit commission report released in December that calls for $4 trillion in deficit reduction over a decade.

It contrasts sharply with Ryan's blueprint, which calls for nearly $6 trillion in savings over 10 years, slashing entitlement programs while lowering taxes for the wealthiest.

"TAKES A PLAN TO BEAT A PLAN"

Christina Romer, a former top economic adviser to Obama who is now a professor of economics at the University of California, has been calling for the Democratic president to come up with his own proposal for weeks, arguing that the White House risks losing the debate over an issue that will be dominant in the 2012 presidential campaign.

"It takes a plan to beat a plan," Romer said.

"I do think the American people deeply care about the deficit. It would be wise to be leading the changes."

The deficit is expected to hit $1.4 trillion in the current fiscal year ending in September.

White House officials said Obama dispute the notion that he is not leading in the debate and stress that the timing of his speech was not dictated by the opposition.

Announcing an outline earlier -- in Obama's January State of the Union address, for example -- would have been a recipe for failure because Republicans were not eager to follow his lead, they said.

Circumstances have changed since then.

Republicans forced Democrats to agree to some $38 billion in spending cuts for the rest of the 2011 fiscal year at the 11th hour last Friday, changing the debate in Washington from whether to cut spending to how much to cut.

The unveiling of the Republicans' proposed 2012 budget also raised pressure on the White House to come up with its own deficit-cutting proposals.

The White House criticized Ryan's plan for cutting taxes for millionaires while increasing burdens for the elderly, and Democratic strategists said having it as a contrast would be more helpful to Obama than being first with a proposal.

"I think Republicans wanted to be first, and I think Obama was happy to let them be first," strategist Liz Chadderdon said. "From the president's perspective, it gave him an opportunity to see their hand."

The White House has used that time and hopes Obama's speech will help drive a bipartisan process to "discuss how we can come together to find common ground on entitlement reform and the other long-term drivers of our deficit," one senior administration official said.

Late or not, the plan has been in the works for some time.

Alan Simpson, a former Republican senator who co-chaired Obama's debt commission last year, said his fellow co-chair Erskine Bowles, a Democrat, had been talking to the White House and lawmakers for months about the issue.

The president has shown a preference for letting Congress take the lead on legislative initiatives while swooping in later in the process to clinch a deal -- and declare victory.

That may not work with the deficit fight. Republicans won control of the House of Representatives largely on the back of promises to cut spending and have gained traction with arguments that they are leading the fight.

Republicans say Obama has come too late to the debate. "We've been waiting for months for the president to enter into this debate with us," John Boehner, Republican speaker of the House, said Monday.

(Editing by Eric Walsh)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article