Barack Obama this week started his bid for re-election, in typically low-key fashion. Even though there are 19 months to go until the election, it’s not unusual for an announcement to be made this early — nor of course is there any surprise in learning that the president wants a second term.

What’s unusual is the slowness of potential opponents to emerge. Newt Gingrich and Tim Pawlenty have taken the first steps towards candidacy, but other prominent Republicans such as Mitt Romney, Mike Huckabee and Sarah Palin are still hanging back. And since Obama will be renominated with only token opposition, almost all the interest for the next year or more will be on the Republican side.

From the size of the swing to the Republicans at last year’s mid-term congressional elections, you might think that the chance to run against Obama would be a real prize. But the mood in the GOP suggests otherwise, and a look at the other two big political stories this week might help in understanding why.

In one, the Republican chair of the house of representatives budget committee, released the Republicans’ alternative budget proposal, committing the party — at least on paper — to trillions of dollars in spending cuts.

It’s always good to see someone get serious about cutting the size of government, but Ryan is something of a maverick within his party and his budget blends fiscal responsibility with attacks on the GOP’s usual hate objects (welfare, science, public transport, etc.). And despite pundits’ fond memories of “It’s the economy, stupid!”, and despite the Tea Partiers desperately trying to market themselves as an anti-tax movement, deficit reduction is not what animates most of the opposition to Obama.

The soul of the Republican party is much more on display in the week’s other story, the Obama administration’s backdown on the trial of Khalid Sheikh Mohammed and other accused conspirators in the  September 11 2001 terrorist attacks.

On Monday, attorney-general Eric Holder announced that instead of a regular civilian trial in New York, as previously intended, the defendants would be tried by military commissions at Guantanamo Bay — thus conceding the critical point made by al-Qaeda, that it is fighting a war and its killers are soldiers, not criminals.

The decision has been widely, and rightly, condemned; Slate’s Dahlia Lithwick described it as “Putting the administration’s imprimatur on the idea that some defendants are more worthy of real justice than others”, and said Obama had “surrendered to … bullying, fear-mongering, and demagoguery”.

Human Rights First said it “flies in the face of core American values and would undermine US standing around the world”.

But it’s important to remember where the demagoguery came from in the first place: the Republicans had clamored loudly against any idea of a fair trial for accused terrorists, and legislation from the new congress had made a trial in New York almost impossible. In today’s Republican party, the running is made by people who care much more about these things — about totemic racial and religious issues — than about spending and deficits.

If the Tea Partiers were really the libertarians they pretend to be, their priorities would be just the opposite. They would support the rule of law, they would want the legal system to pursue torturers as well as terrorists, and when it came to budget cutting they would focus on the astronomical sums of money in the defence budget.

Obama’s decision, deplorable though it is, is in keeping with his usual political tactic: avoid getting too far in front of public opinion, concede ground to the other side and force them to either fall into line or discredit themselves by becoming even more extreme. That’s risky, because it can end up just mainstreaming the crazies, but so far it seems to be working.

The Republicans in essence won the mid-terms not by reconnecting with mainstream America, but by energising their own extremists. In a general election, with its larger and more representative turnout, that’s not a viable strategy, but it’s precisely that crazy, energised fringe that will have a large say in deciding who the Republican candidate will be.

As a result, Obama remains an odds-on favourite for re-election. But it looks as if the US will have to endure some bad policy in the meantime, and it won’t be surprising (or undeserved) if decisions such as this one later come back to bite him.