The one major take away from President Obama statement about the tax deal last night is that his push for deficit reduction is not over. He still thinks the deficit is “too high” and he is going to spend a lot more time try to get a “balanced” deal to cut it farther. From Obama’s speech last night:
The fact is the deficit is still too high, and we’re still investing too little in the things that we need for the economy to grow as fast as it should. […]
I want to make this point: As I’ve demonstrated throughout the past several weeks, I am very open to compromise. I agree with Democrats and Republicans that the aging population and the rising cost of health care makes Medicare the biggest contributor to our deficit. I believe we’ve got to find ways to reform that program without hurting seniors who count on it to survive. And I believe that there’s further unnecessary spending in government that we can eliminate.
But we can’t simply cut our way to prosperity. Cutting spending has to go hand-in-hand with further reforms to our tax code so that the wealthiest corporations and individuals can’t take advantage of loopholes and deductions that aren’t available to most Americans. And we can’t keep cutting things like basic research and new technology and still expect to succeed in a 21st century economy. So we’re going to have to continue to move forward in deficit reduction, but we have to do it in a balanced way, making sure that we are growing even as we get a handle on our spending.
While the bully pulpit has its limitations when it comes to changing broad popular opinion, the President has significantly power to set the narrative and priorities in Washington.
Obama could have declared victory with this deal. He could have said enough has now been done to reduce the deficit and it is time to pivot to more pressing issues. Instead Obama declared this just one insufficient step in his push for deficit reduction and that he doesn’t expect to focus on anything else until more deficit reduction is approved:
We can come together as Democrats and Republicans to cut spending and raise revenue in a way that reduces our deficit, protects our middle class, provides ladders into the middle class for everybody who’s willing to work hard. We can find a way to afford the investments that we need to grow and compete. We can settle this debate, or at the very least, not allow it to be so all-consuming all the time that it stops us from meeting a host of other challenges that we face — creating jobs, boosting incomes, fixing our infrastructure, fixing our immigration system, protecting our planet from the harmful effects of climate change, boosting domestic energy production, protecting our kids from the horrors of gun violence. (emphasis mine)
He thus sets the stage for the fight he says he will not negotiate over: the debt ceiling, which should begin in about two months. He also expects the next round of deficit negotiations to begin when the sequestration delays end, around the same time.
In short, deficit hysteria will remain the singular focus of President Obama and the rest of Washington for the foreseeable future.