“What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further. We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s. … You have to have a president who is willing to spend some political capital on this. And I intend to spend some.” — President-elect Barack Obama, Jan. 15, 2009, to the Washington Post editorial board on his commitment to reform Medicare, which he called “unsustainable,” and Social Security.
Four years later, Obama has a golden chance to begin keeping that commitment. Reform of entitlement programs headed for insolvency is, as he said even before taking office, a must. The current dispute on how to avoid a “fiscal cliff” less than four weeks nigh should yield at least the parameters of that reform.
Unfortunately the White House, in its opening gambit to congressional Republicans, appears oblivious to the president’s warnings about these programs.
The president’s reaction, delivered by Treasury Secretary Timothy Geithner, is to cut total spending by a meager $400 million over 10 years while raising a net $1.6 trillion in new taxes. Obama also proposes tens of billions in spending on stimulus projects and continuance of long-term unemployment insurance and the supposedly temporary payroll tax cut.
While barely glancing at entitlement meltdowns, Obama insists the new entitlement bearing his name, Obamacare, not be touched. He still demands any deal not only raise revenue from high earners, as Boehner offered the day after the election, but must achieve that by raising their tax rates.
We wish Obama would take the money Boehner offered and run. Republicans make a strong argument that increasing revenue by limiting deductions, rather than sharply hiking rates, would have less of an impact on economic growth.
Obama campaigned on those tax rate increases. But he also campaigned just as fervently on the need for a “balanced” mix of revenue hikes and spending cuts. With his obsession on tax rates rather than on debt and entitlements, the president does not look focused on finding a two-party solution for crises that two parties created.
Americans who voted for Obama reflect that call for balance more than his ultimatums have: Politico reported Monday a poll for a moderate Democratic think tank, Third Way, found 85 percent of Obama voters favoring higher taxes on the wealthy: “Yet 41 percent who supported the Democratic incumbent want to get control of the deficit mostly by cutting spending, with only some tax increases, while another 41 percent want to solve it mostly with tax increases and only some spending cuts. Just 5 percent of Obama supporters favor tax increases alone to solve the deficit, half the number who back an approach that relies entirely on spending cuts.”
What Americans see, though, is a White House offering essentially the same tax-centric budget that Obama proposed last winter, while Republicans have moved away from the no-new-revenue budget the House passed.
Instead, Boehner and other Republican leaders on Monday offered Obama a package similar to the deal the two men agreed upon, then scuttled, in mid-2011. In addition to offering $800 billion in new revenue, the offer violates a second GOP commandment: that new revenue come only from economic growth. Yet within hours, the White House dismissed the proposal more for what it didn’t include — those higher tax rates — than for what it did.
Obama’s $4 trillion deficit reduction plan relies on two gimmicks we’ve criticized: $1 trillion in spending cuts that already are scheduled, and $800 billion in reduced war spending even though the money is imaginary; it never was appropriated.
But even using that Obamamath, the Republican proposal is more ambitious: It creates some $4.6 trillion in deficit reduction.
One subtext here is that Democrats undervalue the political danger — from the left as well as the right — that Boehner & Co. took by accepting the White House challenge to write a plan including any specifics at all: Within hours Jonathan Cohn, an Obama-friendly writer at The New Republic, was crowing that, “the offer should make clear, once and for all, which party is eager to cut benefits for seniors.”
Americans also see, courtesy of a Europe wallowing in recession and government debt, the consequences of runaway entitlements. And Americans see, in the fiscal cliff standoff, a rough replay of the 2011 gridlock.
Mr. President, you’ve taken your victory lap. We expect you not to provoke more discord, but to lead a rescue mission — reform of Medicare, Social Security and Medicaid included.
As a smart man once said, you have to have a president willing to spend some political capital on this.