The Hill By Mark Penn - July 19, 2011

At the end of the day, I’d be surprised if there is a government shutdown coming out of the debt-ceiling negotiations — the Republicans learned in 1995 just how devastating that can be. People may want smaller government, but no government is something else entirely.

So President Obama is on firm ground when he pushes back on Republicans holding the country hostage to the debt ceiling, but his message has been puzzling — and even counterproductive — when it comes to the underlying budget fight. Since the Republicans drew him into the debt-ceiling fight, his approval numbers have slipped further; the most recent Gallup polls show him dipping to one of his lowest points since taking office, at 44 percent approve and 49 percent disapprove.

The reason I believe is that he has taken up the right fight, but has the wrong message. What people have heard him say boils down to this — “I’ll cut Medicare if you raise taxes on the wealthy.” It’s a reversal on the long-used Democratic refrain that the Republicans just want to “cut Medicare to lower taxes on the wealthy.”

And it alienates just about everyone. The base is upset that he would cut Medicare, and his upper-income voters (among of his strongest bases) feel targeted. Lost in the process is any message of standing for fiscal responsibility. His primary goal seems not to be fiscal responsibility at all, but higher taxes.

He might have polling that shows Americans want higher taxes as part of a budget deal, but it doesn’t take a lot of polling to read the results of the congressional elections. They were clear that they wanted to see Obama move to the center, and his message here has not added to his appeal to independents, it has shrunk it. All the talk of a bigger deal with bigger tax hikes is not helping either.

Let’s look at the message in the last successful major budget deal, one also forged going into a reelection campaign.

In 1995, President Clinton proposed a balanced budget in 7 years and stressed how it “upholds our fundamental values — to provide opportunity, to respect our obligations to our parents and our children, to strengthen families and to strengthen America — because it preserves Medicare and Medicaid, it invests in education and technology, it protects the environment, and it gives the tax cuts to working families for child rearing and for education.”

Internally, this became known as “M squared, E squared” — preserving Medicare, Medicaid, education and the environment. It provided a unifying rallying cry against Republican ideologues who sought really not to balance the budget but were just using fiscal responsibility as an excuse to gut vital entitlement programs. Clinton’s approval soared as he drew the contrast and stood firm for protecting children and families while sidestepping the issue of taxes. By not making the fight about raising taxes, the president was able to break out of the traditional Democratic and Republican molds and win over independents without losing the base. It was in many ways a centerpiece of his reelection campaign and proof he had moved to the center and was not the kind of tax-and-spend liberal the country would have rejected.

Now times are different, and Clinton had already raised taxes in his first term, but President Obama has mixed his message. He should not create a seesaw of Medicare vs. higher taxes. If the president believes we should have a major tax reform, then he should propose it as part of his next term agenda and campaign not on higher taxes but a fairer, simpler, more responsible system. It’s a great goal, but he has yet to fill the promise with specifics. This is a big issue — as big as when Reagan last reformed the system — and he should take it up the right way and not confuse it with what he needs out of these negotiations.

After the midterms, the president moved quickly to take taxes off the table. He should again rethink his approach to these negotiations and save the tax fight for when he can have it on his own terms, and shift his message to preserving fundamental values and programs while isolating the Republicans for their outdated ideology; that’s the frame he can use to win the budget negotiations now and set the right foundation for his upcoming campaign.