President Obama's Deficit Speech: What to Watch For

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President Obama's speech on deficit reduction this afternoon represents an important public transition for the White House from audience member to protagonist in Washington's budget reform debate. The White House has proposed freezing discretionary spending and public sector salaries, suggested 10-year cuts in its budget, and designed a schedule to reform the health care system while covering tens of millions more families. But this speech is widely expected to be the first time the president addresses a more specific long-term plan to reduce our debt burden.

I'm looking for three key themes.

1. Continuity. Obama speeches often remind me of Passover dinners: Before you get to the main course, you take a moment to remember what's come before. The president will remind Americans of the recession that necessitated large deficits today. He will remind Americans of how health care reform and other actions taken by Congress and the administration have set the country on a path of prosperity and responsibility already. Although this speech has been interpreted by some analysts (me, for example) as a departure from the president's policy, Obama will try, as he always does, to connect the dots of history to show that in fact they align to lead inevitably to this speech. The theme of continuity makes it look like the White House is in control of its own message and not responding wildly to outside actors, like the conservative caucus of the Republican Party and Paul Ryan.

2. Competitiveness. Expect Obama to say something along these lines: "Deficit reduction isn't just about making the numbers work; it's about making the numbers work for Americans." Indeed, deficit reduction puts the entire budget on the operating table and it's reasonable to use this opportunity to rededicate the country toward growth by innovation. The White House has been mocked for its "win the future" theme, but still they have shown no signs of abandoning the motif of competitiveness in their budget rhetoric. As a result, expect the president to call for reinvesting in the holy trinity of education, infrastructure and experimentation.

3. Compromise. In the next ten years, we have to close the budget gap by trillions of dollars to insure against the possibility of a debt crisis. It makes sense to close this bridge from two sides: spending cuts and tax increases. Expect Obama to call for both, with a slight lean to the left to counter Paul Ryan's ultra-conservative plans to cut taxes and reduce entitlements for the middle class. As Sen. Michael Bennet said at a deficit event I attended at the Progressive Policy Institute yesterday, a final budget bill will have to have both Democratic and Republican support because no party has a majority in the House and super-majority in the Senate. There is no way Democrats will accept a bill that is all spending cuts, and there is no way Republicans will accept a bill that is all tax increases. It is a logical inevitability that only a compromise will reach the president's desk.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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