Op-Ed: No More Excuses on Debt, Mr. Obama
CNN Money | February 8, 2011
Anyone looking for serious fiscal leadership from President Obama in his State of the Union Address could have been nothing but disappointed.
He had the right narrative: jobs, investment, competitiveness and fiscal responsibility. But when it came to leadership on actually fixing the fiscal situation -- the hard part, as opposed to soft and fluffy wordsmithing -- there was none to be found.
The president failed to lay out specifics for how to tackle the country's massive debt overload. He even failed to embrace the proposal by his own fiscal commission -- even as a first step to jumpstart the conversation.
I don't want to be too hard on the president. In my heart of hearts, I believe he cares deeply about this issue. I believe he is worried about the damaging effects to the economy and our standard of living of large deficits and debt.
And I believe he has picked serious, thoughtful people to lead his economic team. They have had to take on a series of thankless tasks: navigating an imploding banking system, creating jobs in a jobless recovery and, now, fixing the massive budget disaster not of their own making.
Furthermore, I will grant you that he probably would not have gotten a standing ovation from Congress if he had displayed the kind of leadership I was hoping for.
Imagine ... "Yes, we will fix Social Security by reducing benefits and raising the retirement age; yes, we will bring down health care costs through greater cost-sharing, rationing, and a real health care budget; yes, defense and other discretionary spending will have to not just be frozen but cut; and, yes, revenues will have to go up. Yes we can!"
Right. We all know what kind of reaction that would have gotten.
But enough with the excuses.
Last year, the White House argued it couldn't get specific in its 2011 budget because the political climate wouldn't allow it. Any real proposals, such as entitlement cuts or broad-based tax increases, would have been attacked so viciously that they would have actually set back the cause. That was the argument.
Now a year has gone by, and the debt has increased by nearly $2 trillion. That's $2,000,000,000,000 or, in layman's terms, a whole helluva lot of money. The December tax deal just added another $850 billion to the tab.
Yet, I fear that we are heading to the same old warmed-over excuses for why this year's budget won't be a serious one: "We can't set forth a serious plan if House Republicans won't work with us." Or "The voters aren't ready."
I don't know whether administration officials will use another magic asterisk, budget gimmicks galore or rosy economic assumptions, but I doubt they will be offering a serious budget that improves the fiscal path.
So what then?
President Obama is still the only one who can use the bully pulpit to set the stage for these tough policy choices and bring all the parties to the table. Here is what he should do.
Set a fiscal target: The first step should be setting a target, such as bringing the debt down to 60% of GDP by 2020, or balancing the budget by 2025.
The president should make it a national objective. It's not as sexy as going to the moon, but certainly, it's no less important. Republicans can hardly object, owing to their support for the recent flurry of proposals for a balanced budget amendment. They may even want to balance the budget sooner.
Make the target law: The next step should be to write the fiscal target into law.
The law should include a "budget hammer" -- triggers to make sure the target is met. Then, if Congress didn't meet the target, across-the-board spending cuts and an automatic surtax would kick in. That should get Congress moving.
Get into the details: Yes, the president will have to offer specifics sooner or later. But so too will Congress, a process that will get started with their upcoming budgets.
If Obama doesn't want to use his commission report as a starting point (note, however, that he should) he can draw up his own plan. But realistically, he will have to let go of his "no new taxes on people making less than $250,000" mantra. He'll also have to find more savings in health care, make changes to Social Security other than just raising the payroll tax on the rich and look for real cuts in discretionary spending.
Hold a budget retreat: Finally, the president should host an honest negotiating session to work out the needed compromises between the various approaches. One former member of Congress suggests they work seven days a week, with no breaks for fundraising, to come up with a plan.
If the president doesn't use his upcoming budget to get specific, at the very least he needs to find a way to force the discussion with everyone at the table.