The great tension in Washington’s budget battles is how to operate the government in the here and now when so much political stalemate remains over the future and the seemingly intractable deficits down the road.

For President Barack Obama, this has been doubly true because of the financial collapse he inherited and the scope of his ambitions. Now in his last years, he offered a new budget Monday that attempts to reset this history by investing again in basic appropriations for the core government.


Most simply, his $4 trillion plan is best understood as the opening bid in hostage negotiations with the Republican Congress.

At issue is a set of strict appropriations caps that Obama agreed to during the 2011 debt ceiling crisis and which sharply tightened in March 2013 after he and Congress failed to agree on a deficit reduction plan.

Under the caps, appropriations in 2016 would be effectively frozen for a second year at about $1.017 trillion. Obama would increase that to $1.091 trillion — a $74 billion increase that would be split evenly between defense and domestic spending.

Many Republicans will be reluctant to give up the leverage the caps provide, but GOP priorities like defense spending are caught in the same squeeze. Each party could have an interest, then, in some compromise. But changing the law is a tall order, one that requires Obama’s signature on a Republican-backed bill that can get past a 60-vote point of order in the Senate.

In nominal terms, the higher cap Obama requested is a level not seen since Democrats last controlled Congress in 2010. To borrow from a colorful image used by Senate Appropriations Committee Chairman Thad Cochran (R-Miss.), asking this of the GOP is a little like “rubbing the necks of roosters together” before a cockfight.

But when adjusted for inflation, the same number is closer to a midpoint in 2012 when Republicans held the House. And if no action is taken, the caps now in law would leave government agencies with fewer real dollars than in the last years of President George W. Bush’s presidency.

Moreover, Obama has crafted his request so that two-thirds of the additional money would go to defense, veterans and international affairs — all priorities for key Republican players on the Senate Budget Committee. If new investments in cybersecurity and nondefense research and development are counted, the percentage grows even higher.

Indeed, the president’s new populist rhetoric about “middle-class economics” seems to apply more to how he would pay for the new appropriations — not the spending itself.

His budget calls for increasing taxes on capital gains, ending a loophole for inherited wealth and taxing corporate profits stashed abroad. But his appropriations requests are more down the middle. And Obama would argue that Republicans are only hurting themselves and the nation if they insist on keeping the low caps until he is gone in 2017.

All this illustrates something of a turnaround for Obama himself. He arrived in the White House after the financial collapse of 2008 and felt compelled to spend heavily to try to keep the economy afloat and buy time for the Federal Reserve to stabilize the situation. But the president seemed to sour on the process and has been famously feckless toward the appropriations side of governing even as he has expanded Washington’s role with his health care and financial regulatory reforms.

Now an 11 percent boost in revenues has seemed to embolden Obama, whose budget projects a lower deficit of $474 billion in 2016 — a fraction of what he faced in his early years. One longtime observer described the president’s new posture as “a sea change.”

Last year at this time, Obama played with the concept of adding $55.4 billion in what was loosely billed as his Opportunity, Growth and Security Initiative. This round is much more real. It’s as if the president woke up in November to an epiphany: The gritty world of appropriations is one arena where he still has some leverage with a Republican-controlled Congress.

The much-publicized White House rollout played to the latest headlines to try to make the new spending more relevant.

The budget would offer more money to fight diseases in the wake of the Ebola crisis. An estimated $1 billion is requested in new aid for Central America, about half of which would be targeted to El Salvador, Guatemala and Honduras, the three troubled countries from which thousands of children fled to the U.S. last year.

The budget seeks an estimated $513.5 million — and the potential for new loan guarantees — for Ukraine, beset by Russia-backed rebels. And with foreign-based hackers in the news, it offers an 8 percent increase for cybersecurity together with the creation of a new centralized office to assess the U.S. response to threats.

Obama to Congress: Put politics aside get budget 'done'

Obama’s choice to speak Monday at the Department of Homeland Security was itself symbolic.

The DHS appropriations bill for the current year has been the casualty of a bitter fight over immigration policy. The president’s request of $41.2 billion for the coming year represents an estimated $3 billion increase, including more for border security agencies.

For sure, Obama doesn’t forget his own climate change and education agenda. The Department of Housing and Urban Development, formerly led by the new budget director, Shaun Donovan, is promised $41 billion, a $6.2 billion increase that would help address homelessness and the cost of expiring housing vouchers for Section 8.

But the $534.3 billion Obama is proposing for the Pentagon stands out most and reflects a two-part strategy for the administration.

The first step is to pump up the base budget for the military. But second, Obama seeks to block the Republicans from going around the spending caps by adding off-budget dollars through the “overseas contingency operations” account.

OCO began as a budgeting tool for overseas military actions in Iraq and Afghanistan, but it can also pad Pentagon spending at home — a favorite GOP tool for placating its hawks. Unless Obama can close this escape route, he will have a harder time bringing Republicans to the table.

Thus, his core Pentagon appropriations request goes up by 8 percent, a $38.2 billion increase to improve readiness but also to begin long-term investments in modernizing submarine and nuclear forces. Total procurement and research and development funding would grow by $20.4 billion — accounting for more than half the increase, for example, with substantial new money for the Navy.

At the same time, Obama’s OCO request for defense, which includes $5.3 billion for operations to counter the Islamic State of Iraq and the Levant, totals $50.9 billion, a $13.3 billion drop from what Congress approved in December for 2015. And the administration argues that it is time to transition back to funding the military more through the department’s base budget — subject to the same caps as domestic appropriations.

The White House readily admits that the full $74 billion increase in the president’s budget is too rich for Republicans to swallow. But the bigger problem for Obama may be the offsets he proposes to cover the costs.

Here again, the economy limits the president’s options. Republicans like House Appropriations Committee Chairman Hal Rogers (R-Ky.) most want reforms in the costly entitlement programs that make up the larger social safety net. A report last week from the Congressional Budget Office predicts spending will go up by $2.5 trillion over the next decade, of which 60 percent is driven by Social Security and health care programs. The growth in interest costs alone will be greater than the rest of the government.

But for Obama, big meaningful cuts in entitlements may be even harder now than when his “grand bargain” talks with House Speaker John Boehner blew up in 2011.

The economy has improved since then, but the low- and middle-income families who most rely on those benefits feel even more left behind now that the recovery has taken hold and helped higher-income households.

This explains Obama’s greater emphasis on taxes that target capital gains or Wall Street banks. The administration points out that the budget does show a long-term reduction in the nation’s debt as a percentage of larger economy. But there’s nothing in this budget to match Obama’s past willingness to consider updating the way cost of living is calculated for government benefits including Social Security.

Instead, just a year after the new farm bill was enacted, Obama would have Congress reopen the crop insurance debate to save almost $16 billion over the next decade. He wants the Armed Services committees to consider higher pharmacy co-payments for the military under the TRICARE health plan. And by his count, almost $60 billion in new tax receipts could be collected if Republicans would make good on promised enforcement funds for their favorite target, the Internal Revenue Service.

For all these reasons, the most realistic outcome for the White House is to think small — a one- or two-year deal like the one Congress enacted in December 2013.

In that case, the House and Senate Budget Committee chairs at the time, Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.), found enough small offsets to build a “pay-as-you-go” pontoon bridge across the gap in 2014 and 2015.

The same could be done for 2016 and 2017, by which the caps will be more relaxed and allow for future increases in the range of $27 billion annually — split between defense and nondefense spending.

For example, the CBO estimates that if nothing changes, the 2018 cap will be $1.064 trillion — about $47 billion over the 2016 ceiling. Building a second bridge like Ryan and Murray’s to expedite this increase would still demand offsets, but small enough that some compromise is possible.

“I am assuming there will be negotiations at some point,” said Bob Greenstein, president of the Center on Budget and Policy Priorities. “What’s much less clear to me is whether the negotiations will be successful or whether the Republicans controlling both houses will demand a price much higher than the kinds of things that were on the table in the Murray-Ryan negotiations.”

Just the numbers alone in Obama’s plan will scare off many Republicans, and the political climate is less advantageous for the president.

Months before the Ryan-Murray deal, Republicans had hurt themselves badly by shutting down the government. Today, the GOP is feeling its oats after big election victories in November. And for many tea party conservatives, the spending caps are the one sure thing they can point to where they have reined in government and Obama.

That said, the last time House and Senate Republicans had the power and will to pass a joint budget resolution of their own was in 2005. Close to two-thirds of lawmakers in the Senate and House were not even in Congress back then. And though Senate Majority Leader Mitch McConnell (R-Ky.) has set a schedule for completing a budget resolution this spring, the whole process will get very complicated, very fast if the Supreme Court rules in June against the subsidies underlying the Affordable Care Act.

Among the 12 Republicans on the Senate Budget Committee, Lindsey Graham of South Carolina and New Hampshire’s Kelly Ayotte have spoken out on the need to increase national security funding. Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.) could yet be a kindred soul on the Budget panel — though his office said he remains reluctant to tamper with the caps.

Obama’s budget complicates life, then, for Budget Chairman Mike Enzi (R-Wyo.). He could opt to craft a budget resolution that lifts the caps for defense alone. But any such increase would be deceptive unless Republicans get Obama to sign a bill doing away with the automatic cuts enforcing the caps.

The 60-vote point of order in the Senate is hugely important. Republicans can pass a budget with a simple majority and then employ the expedited procedures known as reconciliation to try to force savings from benefit programs. But tampering with the appropriations caps will require Democratic votes — which means there will be pressure to show some give as well on the domestic spending side of the ledger.

Both parties have some leverage then, but it is a ticklish situation for each.

Obama, as commander in chief, hurts himself if he looks like a pol who sends troops overseas and then uses the Pentagon as a poker chip. And Republicans can talk tough about doubling down on cuts from domestic appropriations, but the record shows that these attempts have limited success.

Ronald Reagan learned this in the 1980s. So did Ryan in 2013, when the appropriations process collapsed in the House under the weight of his added cuts — setting up the October shutdown.

“We can afford to make these investments while remaining fiscally responsible,” Obama said in his remarks at DHS Monday. “In fact, we can’t afford not to. We just have to be smarter about how we pay for our priorities. That’s what my budget does.”