Democrats have begun to realize that standing pat on spending might not be the best electoral strategy after all.  With Gallup confirming that Republicans have big lead on budgeting, the Senate Democrats suddenly have gotten in touch with fiscal responsibility.  The GOP’s strategy to frame cuts as $2 billion a week appears to have made an impact:

After days of overwrought press releases, Congress stepped back from the precipice Thursday, with Senate Democrats embracing new spending cuts even as House Republicans softened the tone of their nearly $4 billion ransom demand to avert a government shutdown next Friday.

Leaders of the House Appropriations Committee said most of the required downpayment will be achieved by sweeping up old pork-barrel projects and terminating programs already targeted by the White House. At the same time, Senate Democrats stepped past President Barack Obama and signaled they would begin looking for new cuts below his spending freeze, an important move in the GOP’s direction. …

The Senate concession was the more significant, and Democrats are close to abandoning the $1.087 trillion “hard freeze” mark they had set just last week for their Appropriations Committee. Subcommittee clerks were called in Thursday afternoon and instructed to “look for everything that is available” in terms of shaping a spending resolution.

One easy target is about $8.5 billion in unspent funds from prior earmarks already identified by House Republicans. And the White House was informed that the Senate now intends to try to expedite some of the savings proposed in the administration’s recently released 2012 budget.

Time runs short, with a March 4th deadline for some action now just a week away.  The likely outcome will be another short-term CR, perhaps for just two weeks, while the House and Senate try to resolve the differences that remain.  But the movement by Democrats in the Senate is the first blink, and it will set the terms of the debate.  No longer will those terms focus on whether to cut in real terms, but how much.

What caused the Democrats to blink?  It could be a number of factors.  Harry Reid’s rhetorical adventures on prostitution in Nevada in the middle of a budget fight certainly made his caucus look as though it would spend yet another year ignoring the priorities of the voters.  The Gallup poll also provided a wake up call.  But the deciding factor may have been a loss of nerve at the other end of Pennsylvania Avenue:

Some Democrats think a federal government shutdown will be a major political boon to their party –- akin to the decisive Clinton-Gingrich war of 1995 — but President Barack Obama isn’t one of them.

White House officials are deeply concerned that even a short interruption in government services, while no economic knockout blow, might slow down a recovery that has just recently gained momentum.

Well, that “momentum” turned out to be illusory anyway, but it’s the right instinct even for the wrong reason.  As former Bush adviser Mark McKinnon told Politico, this isn’t 1995:

Mark McKinnon, a former adviser to President George W. Bush and an admirer of Obama’s political skills, put it this way: “There’s always a danger in politics of assuming past is prologue. This is not [the 1990s] and voters may be angry enough today they wouldn’t mind seeing the government shut down if that’s what it takes to get meaningful cuts. The only guarantee when you play chicken is that someone is going to get hurt.”

The 1994 Republican victory came in a time of economic growth, when federal budgets were far from the crisis point faced today.  The victory stemmed from Bill Clinton’s overreach on HillaryCare and on a series of scandals in Congress.  Newt Gingrich overestimated the desire of American voters to engage in a winner-take-all battle over budgets, and ended up losing the confrontation.

In 2011, the situation is vastly different.  The federal budget now overspends its revenue by 40%, not the 12.8% it was in 1995 (pg 292).  The deficit in 1995 was 2.8% of GDP; this year it’s 12%.  Unemployment in 1995 was 5.6% at the time of the shutdown, with a higher civilian participation rate, not 9.0% with the lowest civilian participation rate in a generation. Voters are much more focused on runaway government spending, which means that the White House probably has this one right– a shutdown due to a refusal by Democrats to cut real spending (as opposed to the rate of increases) would probably be disastrous for Obama.  Harry Reid should get his mind off of the brothels and back on business in Washington.

Update: Bill Kristol just got a call from John Boehner, discussing strategy.  Kristol has an amusing introduction to his report on the call — he thought at first it was an automated fundraising call — but then lays out what looks like a triangulation strategy to force Democrats into cuts:

But the short-term CR doesn’t pro-rate all the spending cuts in the seven-month version. It picks out cuts that the Obama administration has endorsed, as well as earmarks, and terminates them all at once to get to the $4 billion. So it’s going to be a little hard for Democrats and the administration to say these cuts are crazy. (They can say these programs should be terminated only on October 1 rather than right away—but that’s not exactly a killer argument.)

Once the House passes this short-term CR near the beginning of next week, House Republicans will be able to say they’ve passed a seven-month CR, and a two-week CR, either of which would keep government open. The pressure should be on Senate Democrats and the administration to accept the short-term CR or come up with a reasonable alternative to avert a government shutdown. Even liberal media are going to have a hard time blaming Republicans if Senate Democrats and/or the Obama administration drop the ball.

Read it all, of course, but it sounds like a smart strategy for the short term public-relations fight over a potential shutdown.