President Obama took to the airwaves yesterday to reveal his budget plan, in an effort to counter the media attention received by Republican Representative Paul Ryan’s budget proposal. In typical Obama fashion, the speech (the text of which is available here) was an eloquent impassioned defense of an efficient, activist federal government, with all sorts of reference to founding values and communitarian ideals, etc.

In fact, Jonathan Cohn at The New Republic found it “a clear, unambiguous, morally grounded defense of the welfare state — as strong and stirring as I’ve seen from this president.” Which is fine by me. I’m happy to see liberal politicians standing up for welfare programs with strong egalitarian arguments, especially when so many Democrats sheepishly avoids such confrontations whenever they can.

Then Obama got to the part of the speech where he actually talks about policy. Obama started out by placing significant blame for the current debt precisely where it belongs: the Bush administration.

But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed.  We increased spending dramatically for two wars and an expensive prescription drug program -– but we didn’t pay for any of this new spending.  Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

But back to the actual proposal.

The Basics

Estimated savings: $4 trillion over 12 years. Paul Ryan’s budget plan achieves roughly the same savings over 10 years.

Tax Hike/Spending Cut Balance: There is one. Paul Ryan’s budget largely rejected the idea of tax hikes, focusing on spending cuts in health care.

Haven’t We Seen This Before?: Yeah, you have. Obama’s plan looks pretty similar to the plan favored by the Simpson-Bowles deficit reduction commission … that was published like last year.

Taxes

Obama is looking to raise about about $1 trillion by closing tax loopholes, and letting the Bush tax cuts expire for the top income brackets. Count this under the “soak the rich” strategy of deficit reduction.

Spending Cuts

Obama’s plan finally gets around to cutting defense spending – after Medicare and Social Security, it is the single largest federal expenditure – which is something Ryan’s budget basically ignored. Obama is estimated about $400 billion in savings here.

You may remember that Ryan’s budget achieves massive “savings” in Medicare by simply pushing the payment burden for costly medical procedures to seniors instead of the government. And boy, does it “save” a lot. I was glad to see Obama offer a sensible solution. His plan empowers the Independent Payment Advisory Board to change the way Medicare pays for certain treatments, which goes a long way toward reducing the program’s long-term costs. And it does it without reducing benefits for the elderly.

Also, Obama is looking to expand the non-security discretionary spending freeze he advocated last year, to include serious spending cuts. Now that’s a fancy way of saying, “We’re cutting spending on basically everything that doesn’t involve tanks and checks for old people.” We’re looking at $800 billion in savings over 12 years here.

As always, here’s a link to Ezra Klein’s great summary of the budget plan. And here’s a link to President Obama’s actual budget plan.

Strange Timing?

As I’ve already said, I was ecstatic to here an impassioned defense of the American welfare state and American liberalism in general in this speech. It’s generally a good idea to do that when your opponents have just proposed privatizing Medicare and Medicaid so that they become increasingly useless over time. Old people really don’t like that. Even Republican old people.

That said, I’m still not convinced that this is the time to cut spending. We’re still in the middle of a struggling recovery that has so far relied on big spending from the federal government for fuel. Cut that off and I’m not sure where the unemployment rate goes, but it won’t be down. I think Jamelle Bouie at the American Prospect is on roughly on the same page (though he is far more eloquent about it):

Of course, the basic premise of this speech is still a little weird. Unemployment is still high, the job market is still weak, and the economy remains sluggish. In a sane world, deficit reduction would be on the back end, as policy remains focused on restoring the economy to pre-recession levels.

Even still, Obama is likely calculating that the political window for stimulus is over. The Republican House simply won’t go for it. So what’s the next best policy objective that’s actually a realistic possibility? Deficit reduction. And as far as things go, this is a pretty good start on that.

Oh and Joe Biden fell asleep during the speech. But at least he didn’t open his mouth.