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01.23.11

Obama's State of the Union Should Propose Entitlement Reform

President Obama would really floor Republicans—and snare more independents—by calling for entitlement reform during his State of the Union address. He'd also do more than budget cuts to bring down the deficit and debt.

President Obama would really floor Republicans—and snare more independents—by calling for entitlement reform during his State of the Union address. He’d also do more than budget cuts to bring down the deficit and debt. Plus, chat live with The Daily Beast’s Howard Kurtz during the State of the Union address.

The State of the Union is the Super Bowl for policy wonks. The pre-game analysis is a time for armchair-quarterback fantasies and hopes that a suggested play might actually get picked up by the coach.

Here’s my long-ball call: President Obama should pull a Nixon in China and propose entitlement reform.

On the surface, it’s easy to dismiss this policy proposal as absurd; after all, Obama presided over $1.2 trillion in new spending in his first 100 days. He accumulated more debt than every president from George Washington to George W. Bush—combined.

But Obama always argued that the spending was an emergency measure. Two years ago, the U.S. economy was in free fall. Now it has stabilized and even shows some signs of growth. But the $14 trillion U.S. debt is now 95 percent of our GDP, a fact that casts a serious shadow over the future strength of our civilization. The chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, calls the national debt “our biggest national security threat.”

Bending the cost curve through entitlement reform would do more than budget cuts to bring down the long-term deficit and debt, without gutting short-term economic growth. It would also go to the heart of the new talking point about economic competitiveness, because the world’s largest debtor nation cannot remain the world’s sole superpower indefinitely.

Here’s the best part about this modest proposal—the president has backed it before.

Five days before his inauguration, Obama spoke to The Washington Post editorial board about his desire to tackle entitlement reform, specifically Social Security and Medicare reform.

“The real problem with our long-term deficit actually has to do with our entitlement obligations,” he said in the audio recording of the editorial board meeting, available on The Washington Post website. “As soon as the economic recovery takes place then we need to bend the curve and figure out how we get federal spending on a more sustainable path.”

In the interview, Obama offered the prospect of a “grand bargain” to begin long-term deficit and debt reduction, through entitlement reform. “Social Security, we can solve,” he said. “The big problem is Medicare, which is unsustainable...We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.”

That time is now. With divided government, dealing with deficits and debt is a practical and political necessity. Republicans will be floored if Obama proposes serious entitlement reform. Independents would continue their 15-point swing toward the president documented by CNN over the past month. It would be an act of political judo on par with Southern Democrat Lyndon Johnson backing civil rights legislation, anti-communist Richard Nixon opening up relations with Red China, and Bill Clinton backing welfare reform. By seizing the center, each of these bold presidential actions help depolarize a policy debate and led to tangible political benefits. They helped move America not left or right, but forward.

Obama’s opening the door to entitlement reform would have the same effect. And he could build on the work of the Simpson-Bowles deficit reduction commission, which secured support from conservatives and liberal senators including Tom Coburn and Dick Durbin for proposals like increasing the retirement age for Social Security to 69 by 2075, with exemptions for manual labor. Add to that an adjustment like pegging benefits for those currently under age 55 to inflation instead of wages, and the costs looming as baby boomers retire would go down dramatically with comparatively little real pain. All that is needed is some political courage backed by presidential leadership.

“Bill Clinton tried to tee up a serious debate on entitlements in the late ’90s, but Republicans had impeachment on their minds,” Will Marshall, president of the Progressive Policy Institute, told me. “Now that fiscal responsibility is all the rage, President Obama ought to pick up where Clinton left off and challenge both parties to join him in fixing Medicare and Social Security. Besides, the baby boomers now are actually surging into retirement, and their zooming health and retirement costs are the real driver of big spending in Washington.”

This action also would reaffirm Obama’s core support among younger voters in advance of 2012. After all, the entitlement-driven deficits and debt are nothing less than generational theft. We are going to be left cleaning up the baby boomers’ mess, a smorgasbord of unfunded mandates that are already bankrupting entire states. Millennial generation websites like We Can’t Pay That Tab make the generational case for dealing with deficits and debt now instead of passing the buck. But those in need of a stark reality check should take a look at the U.S. Debt Clock, which illustrates the $127,000 current cost of debt per taxpayer.

Proposing entitlement reform will take courage. President Bush attempted Social Security reform and failed in the face of opposition from the left. To be sure, there are other places to seek savings as well—cutting pork barrel projects the Pentagon doesn’t want but Congress continues to fund, as well as scaling back subsidies for ethanol that we can’t afford right now. The administration has shown a renewed seriousness about fiscal responsibility, appointing Clinton alumnus Bill Daley as chief of staff and Gene Sperling as director of the National Economic Council. The announcement that the deficit commission’s executive director, Bruce Reed, will serve as Vice President Biden’s chief of staff and senior policy adviser heightens the new atmosphere of policy seriousness on the essential level of personnel.

It would be an act of political judo on par with Johnson backing civil rights legislation, Nixon opening up relations with China, and Clinton backing welfare reform.

Obama’s audacious move during the State of the Union would reignite a spirit of generational responsibility that has been absent in our politics for too long. It would shake up political fault lines and forge new common ground, helping to prove that divided government does not need to mean gridlock. Its strengthening of the president’s prospects in 2012 while strengthening the economy in the long run are almost incidental benefits. The president should follow through on his initial impulse before taking the oath of office: “What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further,” he said then. That is true now more than ever.

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.