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Can Obama Regain His Lost Leverage on Spending?

The real fight in Congress in September isn’t over Obamacare. It’s about the money.

After all, the money is crucial to how much of President Barack Obama’s tattered agenda will be implemented in his second term. And how much money he gets may come down to whether the president will finally use his veto power to bring House Republicans to heel.

Unlike in 2011, when Republicans successfully held a critical debt limit increase hostage to extract more than $2 trillion in spending cuts, Obama no longer has to worry about a default crisis imperiling his re-election. His charm offensive with Senate Republicans aimed at reaching a budget deal has been a dud so far. He’s signed little of consequence since being sworn in for a second term in January.

But one bill Congress will have to send him this fall is the measure keeping the government open past Sept. 30.

His signature — or veto — on that bill is the biggest piece of legislative leverage he has left.

So far, Speaker John A. Boehner has promised to play hardball on spending, because he believes it’s a fight Republicans can win. But the speaker also has been resisting calls from the right for a shutdown showdown over defunding Obamacare, which the speaker’s allies dismiss as a fool’s errand.

Boehner told lawmakers on Aug. 22 that he plans to pass a stopgap continuing resolution that would keep in place the sequester spending cuts that have become a tourniquet on Obama’s second-term ambitions.

Will Obama cave yet again — as he did in March when he signed a bill that allowed the spending cuts to continue unabated?

Or will he use a veto threat to demand funding for his priorities?

The White House won’t say and, by all public accounts, the president hasn’t decided yet what to do. But all those grand visions and soaring speeches about investing in his priorities won’t amount to much if he can’t get Congress to cough up the cash.

Boehner doesn’t think Obama can credibly risk a shutdown aimed at forcing Congress to spend more money.

“The American people won’t stand for it, and we’re not going to be swayed by it,” he told his conference.

“The president’s desperation to rid himself of sequestration is apparent, but any effort — or even threat — to shut down the government over it will surely backfire,” Boehner spokesman Brendan Buck said. “Sequestration is bad policy, but after all his blown predictions, the president has very little credibility on the issue.”

White House spokesman Josh Earnest, asked Aug. 19 by CQ Roll Call about Boehner’s earlier vow that the sequester will stay until Obama agrees to smarter cuts and changes, would not detail the White House’s strategy. But he hinted that the president’s signature shouldn’t be taken for granted.

“The president is not going to sign a budget agreement that undermines important investments, that doesn’t act in the best interest of middle-class families in this country,” Earnest said.

And Earnest questioned whether Boehner could actually hold the line on the sequester, noting House leaders had to pull an appropriations bill from the floor before the August recess because they didn’t have the votes to sustain the cuts.

“So for the speaker of the House to stand there and insist that he’s going to stick to that seems, at best, unreasonable, considering he doesn’t have the support of his own party to do it,” Earnest said.

The Obamacare defunding push complicates Boehner’s position — both because it undermines the speaker’s aim to pin shutdown blame on the president and because it could force him to bargain with Democrats for votes just to get a bill out of the House.

There are other questions for Obama.

Will he offer up a new compromise of his own? And will he continue to insist on tax increases as part of any plan to replace the sequester?

White House aides tried to cobble together a deal with rank-and-file Senate Republicans in months of informal talks, but those efforts reached an impasse Thursday, predictably over taxes.

“The president has always been clear that closing tax loopholes that benefit the wealthy had to be part of any big deal,” a White House official said.

That statement seemed to leave room for a smaller deal that could avert the sequester in the short run without a tax increase, which may be the best outcome the president can expect.

The two parties are about $70 billion apart. Boehner’s short-term bill would allow spending to continue at this year’s $988 billion level. Democrats and the White House want to spend $1.058 trillion. Under the Budget Control Act, spending would be cut to $967 billion if the sequester isn’t replaced by Jan. 1.

Obama’s predicament can be traced to the New Year’s Eve fiscal-cliff deal, where with a stroke of his pen he signed away much of his legislative leverage.

Republicans’ top priority — making the Bush tax cuts permanent — was accomplished for 99 percent of Americans. They even won relief on the estate tax, permanent relief of the alternative minimum tax and assorted other tax breaks. And while Obama secured higher rates for the wealthy, he no longer had a tax trigger of any kind to hold over the GOP.

The West Wing miscalculated that deep defense cuts would get Republicans to quickly agree to another tax increase as part of a deal to replace the sequester, despite warnings to the contrary from Senate Democrats.

The spending bill isn’t the only challenge facing the president, of course.

The debt ceiling will be hit in mid-October, potentially a few weeks into a possible government shutdown, and both sides are already playing maximum hardball.

Obama has vowed not to negotiate. But Boehner last week doubled down on his own demand for another round of spending cuts on top of the sequester as his price, promising a “whale of a fight.”

One of them will have to blink or we’re headed for another cliff.

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