President Obama’s Overly Modest Deficit-Reduction Plan
Zachary Karabell on why he needs to get real on the budget crisis.
This is becoming like the War of the Roses. President Obama advanced the needle on deficit reduction and budget negotiations by providing a new set of proposals this morning for what the White House calculates will be $3 trillion in reduced spending over the next 10 years. That follows his congressional address last week calling for additional spending and tax breaks to boost economic activity, which in turn followed months of Washington stalemate on the debt ceiling.
The core of his proposal is increased revenue from the very wealthy through closing loopholes, allowing Bush-era tax cuts to expire, and a minimum millionaire’s rate (for a total of $1.5 trillion). Also included are savings from reform to Medicare and Medicaid and from winding down the cost of military operations in Iraq and Afghanistan.
It is, of course, the “Buffett Rule”—a de facto millionaire’s tax—that has received the most attention. As proposed, it’s a minimum tax rather a tax increase, and its revenue implications are far from certain. As a political gauntlet, however, it has clear appeal. Obama took the charges that he is fostering class warfare and shot them back, saying that asking those with more to pay more isn’t warfare; it’s just fair. And he reiterated that there has to be revenue in order to offset escalating expenses, in addition to cutting spending. “It’s not class warfare,” he said. “It’s math.”
Compared, however, with the proposals of Obama’s own deficit-reduction committee at the end of 2010 or with the audacity of the Tea Party, these initiatives are modest. And that may be the most significant weakness. The jobs bill proposed, at less than $500 billion, is modest for a $15 trillion economy. The budget reductions of $3 trillion over the course of a decade—modest. The rhetoric is bolder, but the underlying actions aren’t. Modesty is a becoming quality in multiple venues, but it is not a winning quality in the ongoing game of nations.
And therein lies the greatest challenge for the United States and Obama: we need individually and collectively to become more realistic about the world today and the rate of growth that is feasible for a nation as affluent and developed as the United States. We need to confront the relentless desire for more and juxtapose to that the world as it is. But politically, we have the opposite problem. We dither, we argue, we do little, as the world moves rapidly. Individually, culturally, our reach may be exceeding our grasp. Politically, we are settling for so much less than what is necessary.