Would Obama Deal on Spending?
President Barack Obama is on his way to bludgeoning Republicans into agreeing to raise taxes. The big question is: Can he reach a deal on entitlement spending?
Or are we in for four more years of political warfare and no problem-solving?
Certainly, the political gridlock of his first term was not all his fault. But he’s the president, and by every historical standard of negotiating leadership in partisan times — Abraham Lincoln, Lyndon B. Johnson, Bill Clinton — he falls short.
As Steven Spielberg’s magnificent new movie “Lincoln” demonstrates, the Great Emancipator negotiated tirelessly to win adoption of the constitutional amendment that ended slavery.
When Senate GOP leader Everett McKinley Dirksen of Illinois couldn’t come to the White House to talk about civil rights, LBJ went to Dirksen’s office, beagles in tow.
Republicans impeached Clinton, and still he reached deals with them to balance the budget and enact welfare reform.
Except to avoid a fiscal crisis last year, Obama has hardly talked to Republicans at all. Three weeks short of a bigger crisis, he’s just started meeting with them face-to-face.
In the current battle over how to avoid the fiscal cliff, Obama opened the bidding by offering the Republicans … nothing.
He upped the ante on revenues he was demanding from last year’s $1.2 trillion to $1.6 trillion. He insisted Republicans agree to raise the top tax rate from 35 percent to 37.6 percent, and he put nothing new on the table to limit entitlement spending, the main driver of the government debt.
And he sent his Treasury secretary out to say: Yes, we’ll go over the cliff (and into recession) unless we get our way on the top rate.
Well, it looks like he will get his way on that. Even though Republican leaders have yet to admit it in public, they seem to know he holds all the cards on that one.
He won the election with an increase in the top rate as almost the only item he could claim as a mandate.
And, if no agreement is reached and the country plunges off the cliff, last week’s Pew Research Center poll shows that Republicans will get the blame, 53 percent to 27 percent.
GOP leaders are said to be deeply aware that if taxes rise for everyone, they’ll be seen as having made it happen to protect the highest-earning 2 percent.
Led by Speaker John A. Boehner of Ohio, Republicans have dumped Grover Norquist’s no-revenue-increases-ever stance. The right wing is screaming for Boehner’s scalp for proposing $800 billion in increased revenues derived from capping deductions and other unspecified changes.
But gradually Republicans are yielding on the rate question — the latest being Sen. Bob Corker of Tennessee on Fox News last weekend.
There are any number of plans out there to gain more revenue, including Obama’s proposed increases in taxes on capital gains and dividends and limiting the value of deductions.
Corker has introduced a 242-page bill that includes capping deductions at $50,000, which has been scored as raising $749 billion.
The Heritage Foundation, Taxpayers for Common Sense, the Bipartisan Policy Center and the Center for American Progress all have proposed plans.
But revenue, as important as it is, is only part of the problem. The National Commission on Fiscal Responsibility and Reform (Bowles-Simpson) said it ought to be one-third of the solution. For Obama it’s 50 percent. For Boehner, 22 percent.
Bowles-Simpson proposed that two-thirds come from spending reductions, especially for Medicare, Medicaid and Social Security.
All those programs are going broke and will bankrupt the country unless overhauled by some combination of means-testing benefits and premiums, gradually raising the retirement age and changing the indexing formula for inflation.
Corker’s plan would not include any budget cap on Medicare, which Democrats say would impoverish seniors, but the Congressional Budget Office says that letting private insurance plans compete with fee-for-service Medicare would still save $641 billion over 10 years.
Obama clearly has leverage over Republicans on taxes — and he’s going to win. But Republicans have leverage on spending.
Congress has to fund the government after the current continuing resolution runs out in March. The limit on the national debt will need renewing in January or February.
Obama can like it or not, but Republicans hold the House, and they will get entitlement changes — or else.
So it’s time for a deal.
Republicans are going to risk the wrath of Rush Limbaugh, Sen. Jim DeMint, the tea party and potential primary opponents to raise taxes — albeit under duress.
Now Obama should be willing to risk offending AARP, the unions and liberals by moving entitlement programs — not to mention the country — toward solvency.
After all, he doesn’t have to run again — and having the nation with its debt under control would be a legacy worth having.