Bo Cutter

Roosevelt Institute Senior Fellow and Director of the Next American Economy Project

Recent Posts by Bo Cutter

  • Obama Must Own the Budget Battle

    Mar 1, 2011Bo Cutter

    Shaping the future with today’s choices.

    I support the Obama budget -- or more accurately I understand and (mostly) support the strategy the White House was following in arriving at this budget. At the same time, I think the strategy is incomplete and has, at its core, a major flaw. This blog, therefore, is not about the details of the Obama budget; rather it is about the unfolding of this year as we begin a week leading to the first of several government shut-down dramas.

    Shaping the future with today’s choices.

    I support the Obama budget -- or more accurately I understand and (mostly) support the strategy the White House was following in arriving at this budget. At the same time, I think the strategy is incomplete and has, at its core, a major flaw. This blog, therefore, is not about the details of the Obama budget; rather it is about the unfolding of this year as we begin a week leading to the first of several government shut-down dramas.

    In the interests of transparency, and because most in the New Deal 2.0 blogosphere do not agree with me, I want to be clear that I believe the debt and deficit course we are on is dangerous and not sustainable. It is beyond irresponsible for the President and the Congress not to change that course. The President ultimately will have to take the political risk of truly leading on this question.

    I also believe this debt issue is not the most important one we face (although so long as we do not deal with it, we won't solve the bigger issues) and it is crazy to launch into a deficit slashing spasm now with 9% unemployment. But it is not crazy to put the mechanisms in place now in order to begin to solve it in a couple of years.

    There is no particular point in commenting at length on the specific details in President Obama's 2012 budget. He had to write one, so he did. His budget deals with the same tiny percent of the deficit and debt problem as do the efforts of the Republicans. But no one in this Administration believes this budget will have much influence in the current frenzy. It is a deliberate placeholder and, as such, represents a political decision taken in today's political context.

    That context has two aspects. First, the 2010 November election results guaranteed that 2011 would be a messy, ugly tactical year. Second, there is no organized center in America anymore. (Progressives apparently think this is a good thing for them; it's not.)

    Once November 2010 happened, the Republican House was inevitably going to proceed as it has. Nothing President Obama did with the 2012 budget was going to stop the House from trying to rip apart 2011 programs. And since the Senate Republicans have already stated that the single most important national issue was defeating President Obama in 2012, there is no room for movement there.

    More broadly, there is no center in American politics anymore from which to do anything. Both the left and the right compete to eviscerate the President. If you set aside the "birther" stupidity, left and right wing blogs are fairly similar in the level of contempt expressed for President Obama. These politics have broad consequences: for starters, they mean we are doing absolutely nothing to solve the big issues America confronts. Every major long-term problem we face is getting worse. (If you want a really terrifying read, look at the January issue of Physical Transactions of the Royal Society on the consequences of a 4 degree rise in global temperature -- where we are headed.) We lurch from election to election as each party misinterprets the "mandate" it supposedly received.

    Sign up for weekly ND20 highlights, mind-blowing stats, event alerts, and reading/film/music recs.

    And more specifically, they mean that 2011 will be a series of short-run tactical "Perils of Pauline" budget dramas. There will be several Congressional Resolution dramas, and, probably, a few debt limit dramas. I suspect there will be at least one short federal government shutdown, although not this Friday. The prospects of any actual problem being solved are close to zero.

    President Obama obviously began with the decision that for at least several months there would be no one on the Republican side willing or able to negotiate. Why lay out the full list of horribles a real solution will entail if no one will actually consider them in good faith? So he decided to take the inevitable criticism for not showing "leadership." His second decision was to lay out enough detail to make it clear why everything has to be included in any real solution -- the entitlements, new taxes, and defense.

    The president had to buy time for events to play out, and they will, but not quickly. The odds are high that the House Republican leadership will not be able to manage its coalition and the House Republicans will push too far. The Senate Republicans cannot easily go along as far as the House. There probably will be a short government close down at some point. And this all will go on and on since the Republican leadership has apparently decided that they like the tactic of 2 to 4 week congressional resolutions with a fight each time.

    But this tactic is classic political Washington myopia. Ordinary Americans are going to tire rapidly of all of the high drama and see it as just another version of the Washington they hate. They will also decide there are a lot of cuts they don't want to make: closing down Teach for America was not what they had in mind. So the President has to let the game come back to him.

    But in the meantime, he has work to do. First, he must reclaim the narrative about the future of the U.S. economy. He has to be seen as the one actor in Washington who actually has a plausible view of a future that might work. The White House is trying much harder here than it has in the past; the President made a good start with the State of the Union speech. But they aren't there yet. The task for President Obama's new NEC head, Gene Sperling, is to come up both with that vision and with the tactics the next year requires. If that doesn't happen, the NEC failed.

    Second, the President has to be the embodiment of bipartisanship. He has to take every opportunity, and invent new ones, to bring in the Republicans. If we are going to redo the tax system, bring in the Republicans now. If the CEO of 3M says the president is anti-business, invite him for dinner. Make them decide to be ungracious. It is unlikely that this will lead to much in the short-term except making clear who is and who is not trying to make something happen. Over this next year, the President needs to be a tad more open to his inner Lyndon Johnson and Bill Clinton.

    Finally, the president has to begin to outline what a "grand bargain" would be and why it matters. This is where his budget strategy was incomplete. He should have leaned more toward his own budget commission; he could easily have given a broad endorsement and kept away from the details. He should have made his investment program much more of a true program of investment. Why not propose an infrastructure bank? He should have offered a process to arrive at a "grand bargain."

    I hope the President has the framework for a two-year strategy. You can't make this up day to day, and a lot rides on doing it well. A Washington Post poll, published today, says that at this moment the public would blame the President and the Republicans about equally if a shutdown happens. The president can shift this perception with a purposeful strategy for this next period. If he does, he will be clearly perceived as the leader standing above this mess; a "grand bargain" that is good for the country will be achieved; and he will a two-term president. If he doesn't, the nihilists on the right win.

    Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

    Share This

  • Obama Needs a Plan "B" on Health Care Reform

    Feb 1, 2011Bo Cutter

    Shaping the future with today’s choices.

    Shaping the future with today’s choices.

    I do not think that the decision -- to throw out the entire health care reform, all of it -- was surprising, given the source. I do think it was outrageous. Nor do I think this, by itself, says anything substantive about a final court decision -- we now have four decisions and are tied 2-2. But this issue will go to the Supreme Court, and the Roberts Court is as enthusiastic about being an activist court -- see the Citizens United decision -- as it was in the 2000 Gore-Bush decision, when it acted like Republican precinct captains. So it feels to me as though the odds that health care reform, at least so far as the individual mandate goes, will be thrown out by the Supreme Court are better than 50%.

    Sign up for weekly ND20 highlights, mind-blowing stats, event alerts, and reading/film/music recs.

    I mention the 2000 Gore-Bush decision because, you will remember, the Court went out of its way to underline that the decision was a one-time-only event. And guess what? In invalidating the entire health care legislation, Judge Vinson used much the same language. Another one-time decision.

    The administration has to fight this, of course. But someone, somewhere, in the administration better be thinking about plan "B".

    Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

    Share This

  • David Lane: New Assistant to the President and Counselor to the Chief of Staff

    Jan 27, 2011Bo Cutter

    Shaping the future with today's choices.

    Shaping the future with today's choices.

    I want to add to my brief comments about Bill Daley that David Lane will also be joining the White House as Assistant to the President and Counselor to the Chief of Staff. David is extraordinary. In the 80's he worked as a young staff assistant to Senator Gary Hart. He worked with me for several years both in business and in the Clinton National Economic Council, and then with Bill Daley, both at Commerce -- as his chief of staff -- and in the Gore campaign. He was then a senior officer of the Gates Foundation, and finally has been CEO of the One Campaign, an advocacy group for international economic development and foreign assistance. He has also become one of the major collectors of outsider art in the country, supporting the artists and their work.

    I should underline David's work on development and global poverty, the area he and I have worked together or in parallel on for the last several years. David has shown unmatched effectiveness as a creative spokesperson for the field and is unique in his ability to bring very different, often opposing voices together in support of this cause.

    David's substantive capabilities, in economics, policy development, and global economic development are major but they are dwarfed by his principal skill: David solves impossibly complicated political/substantive/managerial problems entangled with men and women who cannot stand each other. He never raises his voice; and when he finishes, the problem is solved and the people all like each other.

    I told David that you should never be a counselor or deputy unless you understand the four facts of life: They (1) do all of the work; (2) get none of the credit; (3) take all of the blame; and (4) are always lied to. He is going anyway, and The White House will be a much better place because David is there.

    He is also a baseball obsessive.

    Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

    Share This

  • A SOTU that Accomplished it All

    Jan 26, 2011Bo Cutter

    Shaping the future with today’s choices.

    This was exactly the speech the President had to give.

    Shaping the future with today’s choices.

    This was exactly the speech the President had to give.

    As art and theatre, it was at pitch perfect. The speech was simple, well constructed. The sentences had a nice rhythm. It took off with a well done reference to the Tucson tragedy and his brilliant speech there. It had a gracious, inclusive, pragmatic, almost collegial tone. It soared to a great lifting conclusion. And it had a wonderful mantra: "We do big things." And the President, of course, gave it about as well as is possible.

    As policy and substance, this was a major economic strategy speech. I'll go further. This is the first coherent economic strategy a president has put forward in a long time. It was exactly right for our society, and it provides the compass and context for the entire rest of his presidency -- both terms. This is the narrative I have argued for two years the President needed to provide. It is a strategy progressives should want to back.

    He made the two crucial points he had to make: that we must deal with our deficit and we must invest much more in our society. Simultaneously. He then threw in a third point I did not expect: a major reorganization of government. More on that later. The details he emphasized were meaningful. The new investment will involve a new kind of discipline and include private money -- we are going to see some form of an infrastructure bank. Social Security will be protected and strengthened -- he is open to increasing the retirement age. He wants major tax reform and rate reductions, but will push again for higher tax rates at the highest income levels. The numbers say he has to have a new revenue source. He is open to changes in his health care reform bill, suggesting two outcomes: legal reform and a termination of a major reporting burden imposed on small business. There will be more.

    Sign up for weekly ND20 highlights, mind-blowing stats, event alerts, and reading/film/music recs.

    As politics, the speech exhibited master craftsmanship. The president took over the entire center. He appropriated the future -- but then the Republicans had already rejected any future. He welcomed business into his fold. His reorganization proposal/hint is a master stroke. And his deft use of humor -- absolutely deliberate -- minimized in advance the entire Republican thrust. His tone conveyed the thoughts, "Yes, we (you) will disagree on everything, it will be sort of cute to watch, but in the end we (you) will return to what the teacher wanted in the first place."

    As presidential strategy, this speech showed President Obama thinking in the way I had hoped he would from the start. I know he doesn't play point guard, but this showed a president with great court vision. He had to take back the agenda, reclaim the center, create a center of balance and focus for his administration, and most important of all provide a real narrative for the country. "We do big things." He did it all.

    Yeah, I sort of liked the speech.

    Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

    Share This

  • SOTU Should Focus on Three Things: Economy, Economy, Economy

    Jan 25, 2011Bo Cutter

    Shaping the future with today’s choices.

    If I were to speak with President Obama before Tuesday night, I would give the following advice. Each point is important to the country, but also politically valuable for him.

    Make your speech a continuation in tone of your Tucson speech

    Shaping the future with today’s choices.

    If I were to speak with President Obama before Tuesday night, I would give the following advice. Each point is important to the country, but also politically valuable for him.

    Make your speech a continuation in tone of your Tucson speech

    The Tucson speech was magnificent in large part because it appealed to the best of Americans. It spoke to how Americans should deal with each other. The State of the Union speech should continue that message to the next obvious point. President Obama should underline that the American people want Washington to find doable solutions to pragmatic day-to-day issues. He should get way out in front of the Congressional Republicans in terms of offering real discussions.

    Give a short speech focused almost entirely on economics

    The president should convey that: (1) he will focus significantly on the economy; (2) he has an achievable plan; (3) he is thinking about the long and short run; and (4) he will work with the whole Congress.

    This will be the most important of President Obama's first-term State of the Unions. It must be the speech that positions him for the remainder of this term. While the economy cannot be the only topic -- the speech, for example, cannot ignore Afghanistan -- it has to be the main topic.

    Sign up for weekly ND20 highlights, mind-blowing stats, event alerts, and reading/film/music recs.

    Underline four specifics you want to accomplish with Congress

    First, keep the recovery going. This probably means a further payroll tax reduction, and it certainly means linking real budget restraint to increases in employment.

    Second, come to an overall agreement the American people can understand on reducing deficits and debt. This means restraining everything, not simply those items each party dislikes. This has to include defense spending and entitlements.

    Third, reform our tax system and create a new source of revenue. This has to mean maintaining a progressive rate structure, lowering marginal rates for everyone, ending or limiting loopholes, and a new tax. I think the arguments for a progressive VAT are the strongest.

    Fourth, increase investment in both the private and public sectors. I believe the president should propose -- and could get -- a major multi-year public infrastructure investment initiative.

    Conclude by establishing a new positive tone about what our economic future can be

    The president should emphasize that the crisis is over -- and that we succeeded, at major cost, in avoiding collapse. But the hard work of building the next American economy has just begin.

    President Obama clearly began a much-needed reset as soon as he absorbed the lessons and implications of November's elections. And he has improved his political position far more than I thought would be possible. At the same time, the Republicans have a very difficult coalition management task in front of them. With this speech, the president can go a long way toward defining and owning the agenda of the next two years. That should be his objective on Tuesday night.

    Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

    Share This

Pages