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Here's a quote from the New York Times.

But the president will also use the annual primetime address to sketch an activist vision for his final two years in office and to set the terms of a debate that will sharpen the distinctions between the two parties in advance of the 2016 elections.

What does the phrase "the terms of a debate" mean?

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It means what subjects will be debated, and what type of arguments will be allowed.

That is, if a politician can set the terms of the debate, he can prevent his opponents from bringing up subjects that would be disadvantageous to him.

For example, suppose that party or faction A wants to increase taxes to fund some program they consider important, while party B wants to decrease taxes and thinks this proposed new program is not worth spending a dime on. Party A is worried that if both sides present their arguments, the voters will prefer a tax cut to a tax increase and won't be impressed with the value of the new program. So if A has a good, charismatic leader, he may try to "set the terms of the debate" to be "how much of a tax increase do we need to be able to carry out this vital program". If he can get the public thinking that that is the question -- not "do we want to do this at all" but "how much is a reasonable cost to do it", and he can get the media to present the debate in those terms, then he doesn't much care who wins that debate. The fact that the question is "how much increase" rather than "increase or decrease" means that he has already won: he will get an increase.

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The terms of the debate are usually referring to the format. Here is an example: Donald Trump wants to define terms of the debate

In this article, the terms are things like how long it will last, how many minutes will one person have to talk, uninterrupted, who will be the moderator, whether impromptu questions will be asked, etc.

Generally, the subjects are not part of the terms, but there is no reason why they could not be.

Terms of the debate are the ground rules.

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