President Obama says that it's time to stop kicking the can down the road when it comes to dealing with runaway entitlement spending and the grim long-term fiscal picture. This week will put those words to the test.
"We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's," he told The Post five days before taking office.
Is that about to happen? The signals are mixed, at best. The fiscal responsibility summit that Mr. Obama announced with fanfare has turned into something of a fiscal responsibility improv, a slapdash affair in which invitations were being issued as late as Friday. It seems destined to end up being yet another gabfest about the dire fiscal situation - albeit a presidential-level gabfest.
Talk of a commission to deal with Social Security produced such blowback from House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry M. Reid, D-Nev., that the administration gave way - at least for now. This is not a positive omen. "Social Security, we can solve," Obama said in his visit to The Post. Yes, but not by ignoring it.
The fiscal outlook was bleak before the economic collapse and the addition of trillions in new liabilities on the federal balance sheet. A paper by the Brookings Institution's Alan J. Auerbach and William G. Gale depicts the new reality: not just deficits as far as the eye can see but trillion-dollar deficits as far as the eye can see. They find that even under optimistic assumptions, including having the economy return to full employment and letting stimulus spending expire in two years, deficits will range between $1 trillion and $1.3 trillion, in current dollars, for the next decade. This is, as Auerbach and Gale conclude, "an increasingly unsustainable and urgent fiscal problem."
To what extent will the Obama budget address this urgent problem? Monday's summit will be followed by Tuesday's address to Congress, which will focus on the economy, and Thursday's release of a budget, which will offer the first detailed look at the president's long-term fiscal plan.
There isn't likely to be a repeat of the Bush administration charade of submitting budgets that leave out known, huge costs, such as dealing with the alternative minimum tax. The administration's decision to return to showing a 10-year budgetary path, rather than the Bush administration's five, is another welcome sign of willingness to deal with fiscal reality.
To be clear, we're not talking about making cuts now; the economy needs boosting, and deficit spending is in order. But the large gap between revenue and spending must eventually be closed. Obama would be wise to use the economic crisis as a reason to rethink some of his campaign promises, such as not to raise taxes on anyone making less than $250,000 a year and to cut taxes further on those making up to $200,000 a year. How can additional tax cuts be affordable given the existing gap between spending and revenue? Likewise, if Obama wants to propose - and find a way to pay for - a broad expansion of health insurance, he should reconsider his opposition to changing the preferential tax treatment of employer-provided health insurance. Why should some taxpayers without health insurance subsidize the overly generous policies enjoyed by others?
"This, by the way, is where there are going to be very difficult choices and issues of sacrifice and responsibility and duty," Obama said with respect to the fiscal challenge. "You have to have a president who is willing to spend some political capital on this. And I intend to spend some." The next several days would be a good time to start.
© 2018. All Rights Reserved. | Contact Us