President Obama has a habit of arriving at an event a little bit late in the game. Whether on health care reform, Deepwater Horizon, Libya, the Bowles-Simpson plan, or the government shutdown, his style is to hang back, position himself above the fray, and then be the Great Compromiser. Now he has just done it again, finally responding to the Republicans 2012 budget plan with one of his own. But it’s not only a little late; it’s also so middle-of-the road that it risks a compromise that is well to the right-of-center.
As a radical moderate, I don’t mind a middle-of-the-road solution. But even I have a hard time swallowing $4 trillion in deficit reduction over 12 years in which the balance between tax increases and spending cuts is $1 of tax increases for every $3 in spending cuts; in which the growth of Medicare is severely constrained to GDP plus half a percentage point; and in which despite rhetoric about protecting low-income families, they are almost surely going to suffer.
To be sure, the president’s approach has a lot to recommend it. It protects him from Republican attempts to demagogue everything he is for (although they will probably do so anyway). It allows him to play to the middle rather than the extremes. It increases his chances of being reelected in 2012 since the liberal groups it mainly offends will likely vote for him anyway. It shows that he understands the public’s frustration with Washington and gives him and his advisers time to wait and see how the politics of this plays out.
The downsides of this approach, however, are arguably worse. It squanders a president’s ability to use the bully pulpit to educate a public that is woefully unaware of the seriousness of debts and deficits and of what needs to be done to deal with them in a meaningful way. This should include, for example, increased revenues from people who make somewhat less than $250,000 a year but are still comfortably well-off, and it should also include more cuts in defense. The emphasis on general goals and principles in the president’s plan and its lack of specifics makes him look like an evasive leader, one who has failed to articulate a concrete vision of where we should be headed on jobs, economic growth, and opportunity. And perhaps most seriously, it means that the entire debate has shifted rightward. Without a strong set of well-articulated counter measures to the Republican party’s very conservative proposals, these same Republicans are likely to end up getting much more than half a loaf.
I recently heard an off-the-record talk by a leading Democrat. He was incensed by how much territory the president has ceded to the Republicans. Perhaps the solution is for this individual or someone like him to challenge the president from the left. I believe President Obama could still win the next election, and deserves to do so, but we badly need a voice on the other side that can explain what’s at stake and challenge the outrageous claims being made by many Tea Party-inspired Republicans, to the effect that a smaller government will produce more jobs, that seniors can be expected to pay more than twice as much for their health care, and that taxes need to be cut further.
What would a left-of-Obama long-term budget proposal contain?
First, either no or very limited spending cuts: just reallocations to weed out ineffective programs and achieve the president’s priorities. It would recognize that the middle class has taken it on the chin and that low-income families have been decimated by the recession so it would contain new investments in high-priority areas such as wage supplements, child care, infrastructure, and education as laid out in a book that Alice Rivlin and I edited in 2005. We did not endorse such a plan; we simply noted that an important segment of our society strongly believes that government has a positive role to play in people’s lives and that all of the easy spending cuts have already been made.
Second, it would keep most of the provisions in the Affordable Care Act, but move more rapidly toward a public option by allowing more working age Americans with employer-provided insurance access to the new exchanges once they are up and running.
Third, it would pay for all of this with a combination of higher income tax rates for the wealthy and the merely affluent (defined to include those with incomes above $100,000 not $250,000), an elimination of most tax deductions, and a new value added tax earmarked for health care.
Do I think such a plan can be enacted? No. But it’s a reasonable plan and without it the danger is that any “compromise” achieved under the threat of a default on the government’s debt later this spring will be a Tea Partier’s dream come true.
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.