Time for Obama to reset the deficit debate

at 08:57 AM ET, 11/22/2011


President Barack Obama speaks in the Oval Office of the White House in, Washington Thursday, April 14, 2011, while meeting with the co-chairmen of his deficit reduction committee, including Alan Simpson, right. (AP Photo/Carolyn Kaster) (Carolyn Kaster - AP)
Over the past few weeks, the White House has been employing what might be called the “good sibling” strategy. Parents will be familiar with this one: When one child is acting out, the other will press her advantage by becoming ostentatiously polite, studious and well behaved. (Yes, I grew up with siblings. Why do you ask?)

Congress in general — and Republicans in particular — have been acting out for most of the year. There was the near-shutdown in February. The near-default in August. In both cases, the White House inserted itself into the middle of the negotiations, only to look weak and ineffectual when it barely squeaked out 11th-hour deals that left no one happy. So it has smartly stepped back and let the supercommittee fail on its own.

The contrast was perhaps clearest Monday morning. While much of Washington was pointing fingers over the deficit, President Obama was on television signing a bill to give tax credits to businesses that hire veterans. Voters who tuned in to watch Congress fail at doing its job saw the president very publicly doing his. And like good siblings everywhere, the president was happy to rub it in.

“So my message to every member of Congress is: Keep going,” the president said. “Keep working. Keep finding more ways to put partisanship aside and put more Americans back to work.”

Keep being, in other words, more like me and less like you.

The president has ticked up in the polls since beginning this strategy last month. But not by much. A plurality of Americans still disapproves of the president’s job performance, and, politics aside, Washington is still producing a mixture of no policy and bad policy.

Confronted with this, members of the Obama administration shrug. There’s not much we can do, they say, in a world where congressional Republicans won’t agree to a reasonable deal. In most cases, that’s true. In this case, it’s really not.

The president can’t pass policy without congressional cooperation. But in most cases, his veto is sufficient to stop policy that Congress is trying to pass. Which brings us to this simple fact: Our much discussed deficits don’t yet exist. They are the predicted result of policies Congress is expected to pass in the future.

The Center on Budget and Policy Priorities estimates that if Congress simply does nothing for the next few years, the fiscal picture will improve by about $7.1 trillion over the next 10 years. About $4 trillion of that is the expiration of the Bush tax cuts. An additional $1.2 trillion comes from the trigger that kicks in when the supercommittee fails. Some Medicare cuts, the expiration of stimulus programs and lower interest payments account for most of the rest. Our projected deficits look so large only because we expect Congress to pursue these policies without paying for them.

Obama could simply say “no” to this: He could say he plans to veto any non-emergency proposals that increase the federal deficit.

But the veto plan shouldn’t be anyone’s ideal policy, least of all Obama’s. Rather, it should be Obama’s trigger: The thing that happens if Congress refuses to agree to a better deal.

Because there is a better deal out there: the report from the Bipartisan Fiscal Commission led by Erskine Bowles and Alan Simpson. It’s not perfect, of course. But it’s better policy than anything that the supercommittee was considering or that emerged during Obama’s negotiations with House Speaker John Boehner (R-Ohio) or Vice President Biden’s negotiations with House Majority Leader Eric Cantor (R-Va.). And it actually has some bipartisan support.

Despite including deeper defense cuts and more taxes than anything the White House has produced, it received 11 of 18 votes on the commission and was introduced into the Senate by three senators from each party. And today, Democrats and Republicans continue to lavish it with praise. Some are even looking to revive it in the aftermath of the supercommittee’s failure. Sen. Lindsey Graham (R-S.C.) issued a news release saying, “Today I call on President Obama to embrace the Bowles-Simpson plan.” Sen. Joe Manchin, a West Virginian who is probably the most conservative Democrat in the Senate, made the same demand.

The White House never embraced the Bowles-Simpson report. Administration officials worried that the tax numbers don’t add up and that the defense cuts are too deep. They didn’t like that the proposal caps tax revenue at 21 percent of the GDP or that it raises the eligibility age for Social Security.

They also hoped they could strike a better deal. They couldn’t. And looking at the deals that almost came to fruition this year, there’s plenty in the Bowles-Simpson report to like: It argues for $2 trillion in revenue, forces tax reform and repairs our broken system of infrastructure funding.

At this point, it would behoove Obama to press the reset button. To say that he made a mistake. At the very least, a process based off Bowles-Simpson would have forced both sides to recognize what a reasonable, centrist proposal looked like. That alone is better than what we’ve had thus far.

The failure of the congressional negotiations presents an opportunity to undo that mistake. Obama should ask Congress to begin drafting legislation based on Bowles-Simpson, including some fixes (few Republicans will resist the White House’s entreaties to lower the defense cuts) and additions (no deficit proposal should be signed if it doesn’t extend unemployment insurance and the payroll tax cut).

In so doing, Obama would achieve three important things: He’d place the deficit debate back on more reasonable terms. He’d take back the initiative from House Republicans. And he’d give a better policy package a fighting chance at passage.

Then it would be up to Congress to decide whether to keep playing bad sibling or get some praise for themselves, too.

Related posts:

-The best and worst of the Simpson-Bowles plan.

-Obama’s deficit plan is more conservative, less ambitious, than Simpson-Bowles.

 
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