The president’s budget proposal presents Congress with an opportunity to redeem itself after an embarrassingly dysfunctional first session that ended in the lowest public approval ratings for Congress in recorded history. This is Congress’s chance to show that it can make the decisions necessary to fund the government and restore fiscal responsibility — even in an election year.
The president’s budget is a credible opening bid in what could be a constructive negotiation. Many will say that we are naïve to expect Congress and the president to negotiate seriously during a year in which control of the House, Senate, and the White House are at stake. The seriousness of the pending fiscal crisis, however, demands that we speak out.
To Congress, we say: Pass a budget resolution this year. Use the powers, including reconciliation, that you have to actually make progress both on economic recovery and reining in debt, and use this opportunity to educate your constituents on fiscal facts.
To the president, we say: Show that you are willing to risk political capital by truly negotiating with Congress. Insist on fundamental reforms to entitlements and tax policy, and use the bully pulpit to bring your party and the American people to the negotiating table.
This is an election year, but it doesn’t have to be a wasted year on the fiscal front. It doesn’t have to be another year of kicking the can down the road. It doesn’t have to be another “Groundhog Day” kind of year.
Those who believe that the fiscal crisis can wait until 2013 assume that the November 2012 elections will yield some dramatic change in the political leadership. We believe that such assumptions are very unrealistic. Even if Republicans win the Senate majority, it will be only by a few votes, leaving the GOP far short of the 60 votes it takes to really pass important legislation. If Republicans retain the House, it might well be with a smaller majority than it enjoys now, and it might be that Democrats regain a majority there. And even if Republicans win the White House, it will be by a narrow margin, as it will be if the president wins reelection.
At the end of the 2012 election cycle, another election cycle begins. Politicians have to face reality — it’s always a political year. We have used that excuse year after year, as deficits have soared and as our national debt has reached unsustainable levels. Indeed, it might be that an election year, when voters are really listening, gives policymakers the best chance to educate and legislate.
All serious bipartisan efforts to stabilize the federal debt — including the Debt Reduction Task Force we co-chaired at the Bipartisan Policy Center — have concluded that we must slow the growth of the major entitlements and raise additional revenue from a more efficient, fairer tax system. So let’s get on with it! Social Security approaches difficult times. Medicare and Medicaid are promises that we cannot keep under present configurations. Veterans’ entitlements are eating away at the basic defense capability of the nation. The tax code is a mess that discourages economic growth, rewards those who can afford the best tax lawyers and provides loopholes that add hundreds of billions of dollars to our indebtedness through economic distortions.
Congress and the administration can surprise the voters. Work together, shed the far left and far right extremes in both parties, and begin the job that demands doing.
The developed world right now is trying to bail out Greece, a victim of its own fiscal irresponsibility and extreme promises to its voters. Right now, America feels little real negative impact from its own fiscal irresponsibility. We enjoy historically low interest rates for a variety of reason — reasons that will not persist forever.
Soon the world will begin to demand that America increase the interest that it will pay to sell its debt. We hope that the fear and calculations of political leaders won’t force the rest of the world to try to bail out America, which is truly too big to fail.
Sentiment inside the Beltway has turned sharply against China. There are many issues where the two parties sound more or less the same. Trump and others in the administration seem heavily invested in a ‘get very tough with China’ stance. It’s possible that some Democrats might argue that a decoupling strategy borders on lunacy. But if Trump believes this will play well with his core constituencies as his reelection campaign moves into high gear, he will probably decide to stick with it, if the costs and the collateral damage seem manageable. But that’s a very big if, especially if the downsides of a protracted trade war for both American consumers and for American firms become increasingly apparent.