Flexibility needed to tame deficit
Speaker of the House John Boehner and President Barack Obama at the White House for budget-deficit talks (July 11, 2011). Credit: Getty Images
President Barack Obama escaped the dizzying political spin roiling the debt-ceiling debate for just a moment yesterday when he refused to accept any stopgap measure. Raising the debt ceiling just enough to forestall default on the nation's obligations for an additional month or two would simply prolong the partisan brawl roiling Washington.
Entrenched positions would become more intractable as the calendar moves toward the next election. And it's a good bet Democrats and Republicans would be locked in the same standoff as any new deadline approached. Prolonging the agony wouldn't be good for the troubled economy.
It's time to solve the problem.
The outlines of various options for reining in federal deficits and debt en route to raising the nation's $14.3-trillion debt ceiling are clear.
One option would cut $2 trillion in discretionary spending over 10 years. That's the figure reached in bipartisan negotiations led by Vice President Joseph Biden. But those talks fell apart a few weeks ago when Republicans refused to consider any tax increases and walked out.
Another option is Obama's proposal for a $4-trillion deal that would cut $3 trillion in spending -- with Social Security, Medicare and Medicaid also going under the knife -- and raise taxes $1 trillion by limiting income tax deductions while lowering tax rates. That proposal survived for all of one day before Republicans shot it down Saturday, again rejecting any tax hikes.
Obama waited so long to trot out that mega-proposal that it's not exactly political paranoia to suggest he was using it to paint Republicans as obstructionists so committed to protecting tax breaks for corporations and the wealthy that they're willing to kill a potentially transformative deal on spending. And if that was his intention, Republicans walked right into the trap by again refusing to give one inch on taxes.
Democrats have come a long way toward the Republican position on spending. And Obama dramatically upped the political cost for Democrats Friday by putting Social Security and Medicare -- his party's sacred cows -- on the table. With government spending at a 65-year high as a percentage of economic output, it was the right thing to do. Deep cuts are necessary, and there can be no sacred cows. That includes raising revenues through closing tax loopholes.
Whatever spending and tax changes eventually become a part of the grand 10-year debt bargain should be structured to hit hardest in the future. With the recovery stalled and joblessness ticking up in June, now is no time for self-inflicted shocks to the economy.
Still, it's unfortunate that a large number of House and Senate Republicans have locked themselves into an inflexible position by signing a tea party-inspired pledge never to raise taxes. That may have been good politics, but rigidity is the enemy of governing.
Democracy can't work without compromise. With default looming, just saying no is not an option.
