11.30.10

Deficit Demagogues Rev Up

Obama’s deficit panel is set to suggest an explosive combination of Social Security cuts and tax hikes tomorrow. John Avlon on the bipartisan cowards trying mightily to derail the plan.

Obama’s deficit panel is set to suggest an explosive combination of Social Security cuts and tax hikes tomorrow—even though internal disagreements have punted a vote on their proposal until Friday. John Avlon on the bipartisan cowards trying mightily to derail the plan.

The president's deficit-reduction commission is scheduled to vote tomorrow on what might be the best shot our country has at a bipartisan plan to get the national debt under control. Establishment Washington is sniffing that the proposals are DOA while ambitious draft plans have come under attack from the right and—especially—the left.

"We've got Holocaust deniers, climate-change deniers, and now we've got fiscal-crisis deniers," Will Marshall, president of the Progressive Policy Institute, told me. "They don't believe that we have to deal with our deficits and our debt."

After an election year animated by Tea Party protesters angry over the generational theft of the deficit and the debt, D.C. politicians would rather demagogue the debt for campaign gains—or embrace denial encouraged by special interests—than actually deal with it. Even by Washington standards, this is cynical.

But the commission Co-chairmen Alan Simpson and Erskine Bowles are not giving up without a fight. They are considering a range of policy packages that can reach the 14 out of 18 commission-member threshold needed to move the proposal to Congress for consideration. Sources familiar with the commission's thinking suggest that one option could include delaying the vote for another week as they try to gain support for a more modest or incremental set of proposals. This is not an area where we can afford to make the perfect the enemy of the good. If these two old Washington hands play their cards right, it will present an early challenge for President Obama’s post-midterm election recommitment to bipartisan leadership and the Republicans’ promises to rein in the deficit and the debt. If they fail, no one will be happier than our Chinese government creditors.

The GOP's early actions fueled the Beltway cynicism toward this commission. Senate Minority Leader Mitch McConnell called for a bipartisan deficit-reduction panel in at least six floor speeches—but when the measure finally came up for a vote early this year, seven GOP Senate co-sponsors of the bill voted against it. No, we're not living in a Profiles in Courage-style era.

Consequently, President Obama convened the commission led by former Clinton Chief of Staff Bowles and the respected former Republican Senator Simpson. Congressional leaders of both parties hand-picked its members, including deficit hawk Rep. Paul Ryan (R-WI) and former OMB Director Alice Rivlin, who also co-chaired the competing Bipartisan Policy Center Debt Reduction Task Force.

“If the far-left is exercised and the far-right is exercised, it means that you may have something viable to consider.”

Days after the midterm election, Bowles and Simpson released a draft set of proposals designed to start a public debate about the unsustainable nature of our deficits and debt. They set off a firestorm. Few people were expecting the breadth and depth of their plan—a sweeping reformation of taxes, spending and entitlements that would reduce the deficit by some $4 trillion over the next decade while achieving a balance between taxes and spending at 21 percent of GDP.

The Dean of Reasonableness, David Gergen, was quick to call the proposals "an act of political courage," warning that "for those who reject them out of hand, it's an act of political irresponsibility and indeed cowardice."

As if on cue, Nancy Pelosi released a statement affirming the importance of doing "what is right for our children and grandchildren's economic security as well as for our nation's fiscal security"—and then did precisely the opposite, calling the proposals "simply unacceptable."

Pelosi was calm compared to AFL-CIO President Richard Trumka, who said the proposals "just told working Americans to drop dead." Democratic Congresswoman commission member Rep. Jan Schakowsky didn't like it either, but at least she had the decency to propose her own deficit-reduction plan. The liberal commentariat and netroots were buzzing with disapproval, taking their lead from Paul Krugman, who decried "deficit hysteria," and MSNBC commentators calling it "the catfood commission" (who said fearmongering was just for the far-right?). Fairly modest adjustments to Social Security payment formulas—such as raising the retirement age to 68 by 2050—were described as "gutting Social Security" and part of the commission's "war on the middle class" by Michael Hiltzik for the L.A. Times.

The left's opposition was at least semi-understandable, given the commission's center-right prescription of entitlement reforms and targeted tax cuts. Grover Norquist's Americans for Tax Reform was on far less stable ground when they blindly reached for the hyperpartisan hymnal, saying that "the commission is merely an excuse to raise net taxes on the American people." Cutting the top rate to 23 percent, eliminating the alternative minimum tax, and reducing corporate taxes is apparently not enough for the absolutists in Norquist's camp.

"If the far-left is exercised and the far-right is exercised, it means that you may have something viable to consider. After all, both the country and the solutions are in the sensible center," former Comptroller General of the U.S. David Walker told me. "The far-left and far-right have no plan. They are the do-nothing wings of the two parties—and doing nothing is simply not an option."

But "it is surprising how lonely Norquist was—there has not been a huge squawk [on the right]" David Frum, the former Bush speechwriter who runs FrumForum.com told me. "This is what a rational Republican policy would look like."

"There are going to be hard pills to swallow for everyone," Frum continued. "The federal government currently takes in 16 percent of GDP in taxes—that's up 2 percent from last year, which was the lowest percent since World War II. The hard pill to swallow for the right is that tax revenues are going to have to go up. What's going to be hard to swallow for the left is that domestic spending is going to be cut more brutally than ever before. The hard pill to swallow for the general public is that everything in the budget that is outrageous and indefensible is small. And the hard-pill to swallow for the budget hawks is that there is no way we're going to get out of this hole without growth."

This is a fight with generational implications unfolding in real time. A growing number of Americans understand that the deficit and the debt are existential threats with geo-strategic implications—the world's largest debtor nation cannot remain the world sole superpower forever.

President Obama talked about bringing down the debt through entitlement reform before he took office. Now is the time for him to lead on that promise and start to re-seize the center. In the process, he can challenge Speaker-elect Boehner to show that he heard the message of the Tea Party by agreeing to put the deficit commission recommendations to a vote in the House first, if Bowles and Simpson emerge with a 14-member supported plan.

America cannot afford to wait for another pass at this problem—conservatives consider taxes a matter of theology while liberals resist entitlement reforms. A better bipartisan solution will not emerge from this divided congress. Demagoguery and denial are both unacceptable options when it comes to the debt. We need to start taking action. As our Chinese creditors say, "a journey of a thousand miles begins with a single step."

John Avlon's new book Wingnuts: How the Lunatic Fringe Is Hijacking America is available now by Beast Books both on the Web and in paperback. He is also the author of Independent Nation: How Centrists Can Change American Politics and a CNN contributor. Previously, he served as chief speechwriter for New York City Mayor Rudy Giuliani and was a columnist and associate editor for The New York Sun.