Editorial: Compromise to steer clear of 'fiscal cliff'
If the federal government is ever going to resolve its budget woes, Republicans and Democrats will each have to do something they loathe. For Republicans, that's raising taxes. For Democrats, it's reining in Medicare and Medicaid spending.
For the last two years the biggest obstacle to a grand deficit-reduction bargain has been Republicans' adamant refusal to raise taxes. There have been encouraging signs in recent days that Republicans, chastened by losing this debate in the election, are slowly accepting the political reality that the most affluent will have to pay more.
But now some Democrats, led by Rep. Keith Ellison (D-Minn.), the chairman of the 77-member Progressive Caucus, are digging in their heels against any changes in Medicare and Medicaid that increase what beneficiaries pay or cut their benefits. President Barack Obama should not allow them to become the next obstacle to compromise.
A deal with House Speaker John Boehner (R-Ohio) that would raise $1.2 trillion in revenue over 10 years and cut $400 billion in entitlement spending, mostly from Medicare, fell flat yesterday. But Obama is clearly willing to cut entitlements. For that formula to become an actual deal, Obama will have to make it clear to his party's left wing that intransigence on entitlement spending is just as irresponsible as intransigence on taxes.
In events at the White House and in campaign-like public appearances this week, Obama has been emphatic that the top 2 percent of income earners will have to pay more. A handful of congressional Republicans, including Rep. Peter King of Seaford, recently repudiated the no-new-taxes pledge they signed in the past with Grover Norquist's Americans for Tax Reform. And at least one, Rep. Tom Cole of Oklahoma, now says the Bush-era tax cuts of 2001 and 2003 should be allowed to expire for the top 2 percent of taxpayers, if that tax hike is coupled with entitlement savings.
It would be a disaster if Democrats replace Republicans as the roadblock. The progressive caucus' hard line against savings in entitlement programs may just be a salvo in the political messaging wars, or a bargaining position calculated to counter the Republican right's anti-tax fervor, which has softened but hasn't disappeared. But MoveOn.org, a liberal political action committee, has threatened primary challenges against Democrats who support benefit cuts.
Obama should make it clear to his party's left wing that significant cost-savings in entitlement programs are necessary and must be a part of any deficit-reduction deal. And he should prepare the public for changes in the popular programs.
To avoid the "fiscal cliff" of automatic tax hikes and spending cuts slated for January, which the Congressional Budget Office says would drive the economy back into recession, the lame-duck Congress must reach an agreement on the fate of the Bush tax cuts and some spending cuts. That's the most it can be expected to achieve in so little time.
It will be up to the next Congress to fill in the details of comprehensive tax reform and changes to entitlement programs to make them sustainable. Finding workable compromises won't be easy. But that's what governing is all about.