Obama likely to focus on deficit in next 2 years

[October 25, 2010]  WASHINGTON (AP) -- Preparing for political life after a bruising election, President Barack Obama will put greater emphasis on fiscal discipline, a nod to a nation sick of spending and to a Congress poised to become more Republican, conservative and determined to stop him.

He is already giving clues about how he will govern in the last two years of his term.

Obama will try to make gains on deficit reduction, education and energy. He will enforce his health care and financial overhauls and try to protect them from repeal should Republicans win control of Capitol Hill. He will use executive authority when blocked by Congress, and steel for scrutiny and investigations if the GOP is in charge.

While trying to save money, Obama will have to decide whether to bend to Republican and growing Democratic pressure to extend Bush-era tax cuts, even for the wealthy, that expire at year's end. Obama wants to extend them for people making less than $200,000 and married couples making less than $250,000, but a broader extension is gaining favor with an increasing number of Democrats.

Moving to the fore will be a more serious focus on how to balance the federal budget and pay for the programs that keep sinking the country into debt.

In other times, that discussion might seem like dry, Washington talk. Not now. People are fed up with federal spending, particularly as many remain jobless.

The White House refuses to talk about how the president will have to adjust his style or goals if power in Congress tilts right, for fear of undermining what Obama is still campaigning hard to do: keeping Democrats in power. There is no conceding as Obama recruits voters and rallies supporters all the way to Nov. 2.

Yet if polls and analysts are on target, Republicans are poised to win big, possibly taking control of the House and gaining seats in the Senate, where Obama's party already lacks the votes to overcome bill-killing delay tactics. Obama probably will operate in an environment with even fewer moderate Republicans.

The president has signaled that at the start of the new year, he will speak more directly to the country about the financial choices ahead. "If we're going to get serious about the deficit, then we're going to have to look at everything: entitlements, defense spending, revenues. ... And that's going to be a tough conversation," he said.

It's one that will be framed by a bipartisan debt commission, whose ideas this December will give Obama political cover on where to suggest unpopular cuts.

Obama says the most frustrating part of his presidency is that he had to keep spending money and adding to the deficit in his first six months in office "to save the economy." He has from the start called deficit reduction a goal, but one that had to get bumped in favor of sparking the economy.

Almost 60 percent of likely voters now say cutting the yearly budget shortfall is the priority, even if that means the government can't spend on new education programs, develop alternative energy sources or enact his health care overhaul or alternative energy policies, an Associated Press-GfK poll found.

Obama defends the huge economic stimulus plan and the bailout of U.S. automakers, and doesn't blame people for getting tired of all the spending. But he does accuse Republicans of showing a lack of genuineness about fixing the systemic problems that have driven up the debt long before he won the White House.

And there rests the true trouble.

Even though Obama and the Republicans ostensibly share the goals of reducing debt and creating jobs, they disagree fundamentally on their approaches. That problem appears to be worsened by the lack of a serious working relationship among the leaders. If divided government simply leads to more division over the budget and economy, newly empowered Republicans and a Democratic president seeking re-election may both pay the price.

"It's going to be very hard to find common ground," said James Thurber, a professor of government at American University. "To a certain extent, (Obama's) strategy depends on the strategy of majority of the House, and what can be found in the Senate, where's he's basically going to be deadlocked."

House Republican leader John Boehner of Ohio said if Obama and his team are going to work with the new Congress, then they must accept the end of government stimulus efforts as a means for creating jobs. Boehner and fellow Republicans have outlined a plan for governing that includes deep spending cuts and a repeal of Obama's health care law, among other changes. Boehner is likely to ascend to House speaker if his party wins a majority.

"They're going to have to signal some kind of willingness to work with Republicans to cut spending," Boehner told The Associated Press. "Cutting government spending is what the American people want, and it's an approach neither party has tried yet."

The federal deficit was a near-record $1.3 trillion for the just-completed budget year.

Obama may succeed in getting Republican support for trade pacts on a new education law that insists on school reforms. He will go for an immigration overhaul and energy legislation, but have to accept smaller, piece-by-piece results. Capping of greenhouse gas emissions, for one, seems to be going nowhere.

"It's a very different reality for the president for the next two years, which is not to say that nothing gets done," said Norman Ornstein, a political scholar at the American Enterprise Institute. "Even in a rancorous and nasty environment, it seems to me there may some areas of opportunity."

Either real compromise or political pressures may pull Obama and enough Republicans together to get some priorities done. President Bill Clinton managed to rebound and work with Republicans after they swept into office in 1994, teaming up on welfare and balanced-budget legislation.

Never to be ignored are the core Democrats who helped get Obama elected and who, in some cases, are disgruntled about the pace of progress. "He's got to be careful to manage his base," said Ann Crigler, a professor of political science at the University of Southern California. "His election is going to start Nov. 3."

[Associated Press; By BEN FELLER]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.