Later today, President Obama will deliver his speech on long-term deficit reduction. This was not planned. At the beginning of the year, the White House didn’t lay out a strategy to just touch on the deficit in the State of the Union, allow Paul Ryan to propose his ideological budget plan, and then scramble to come up with a response. But the President has been captured by events and captured by official Washington’s demand for “seriousness” in the budget debate. And he’s succeeded in pushing his fellow Democrats around for his own benefit.
The first surprise came over the weekend, when many congressional Democrats first learned of the president’s plans to wade into the deficit debate with a major speech this Wednesday. Then, on Tuesday morning, the Washington Post reported that Obama plans to endorse the controversial recommendations of Alan Simpson and Erskine Bowles, the co-chairs of his deficit reduction commission. Many Democrats had criticized those same recommendations when they were released late last year. So now Obama’s allies on and off the Hill are scrambling to pull off a tricky balancing act: supporting their president while holding the less appealing aspects of Bowles-Simpson at arm’s length.
The need for Dems to alter their rhetoric in response to Obama’s moves was on full display Tuesday morning at the Center for American Progress, where Democratic activists and members of Congress gathered for a speech by Rep. Chris Van Hollen (D-Md.). Van Hollen made it clear that Bowles-Simpson would become the new standard-bearer for the Democratic Party, saying that it launched “a really important dialogue” and took “an overall balanced approach” to deficit reduction [...]
To be sure, Van Hollen made it clear he’d be reluctant to embrace some of the most contentious aspects of Bowles-Simpson—namely the proposal to raise the qualifying age for Social Security, which led liberals to deride the deficit panel as a “cat food commission” last year. Similarly, while Podesta called Bowles-Simpson “a benchmark to begin discussion,” he added that the plan would “need adjustment to serve as a solid foundation for future economic growth and a federal budget.”
Van Hollen was putting his own budget together before all this happened.
Maybe there are a few Democrats with free will who are willing not to rush to Bowles-Simpson as quickly. John Conyers and Raul Grijalva told the President yesterday not to mess with Social Security. Sherrod Brown told him not to mess with Medicare. Paul Begala had additional advice: make this a moral fight.
But these are a few voices in the wilderness. The President’s talk today will be significantly more bloodless than Begala makes it out to be. It will have four buckets: keeping domestic spending low, cutting defense, “reforming” Medicare and Medicaid, and reforming the tax code. And this will all build off of Bowles-Simpson, which shared much of these ideas. The details are important, but they won’t really be discussed today. An administration official said that “The president will make clear that while we all share the goal of reducing our deficit and putting our nation back on a fiscally responsible path, his vision is one where we can live within our means without putting burdens on the middle class and seniors or impeding our ability to invest in our future.” The watchword is “balance.” As in, there’s a good way to cut the safety net and a bad way, and we have to put in place the good way.
Bowles-Simpson cut defense by making soldiers pay more for their health care. It reformed the tax code by lowering tax rates while cutting deductions. It “reformed” Medicare and Medicaid mainly by saying “Medicare and Medicaid will be reformed” and offering no real plan to get there, what is commonly known as a “magic asterisk.” In fact, that’s how they balanced the budget. So there’s nothing all that serious about their proposal. And don’t get me started about Paul Ryan’s.
On the sidelines of this debate, but rapidly moving toward the center, is the inexorable fact that doing absolutely nothing would pretty much balance the budget within 10 years. That means returning the nation to the Clinton-era tax rates by letting the Bush tax cuts expire. That means letting Medicare reimbursement rates reset or finding a way to pay for them. In the hands of a skilled operator as the chief executive, this could be a very powerful tool. The President could simply say, “here’s how we’re going to balance the budget. I’m not going to sign anything that increases the deficit.” And, done.
But that sounds unrealistic to Washington, so they have to jump through a series of hoops to reduce the deficit by the exact same amount as letting the Bush tax cuts expire. That’s simply a wealth transfer. The Bush tax cuts mostly rewarded the rich (even the cuts at $250,000 and below impact the rich more than the poor). The Gang of Six or Bowles-Simpson or the Ryan budget don’t punish the same people who got that reward.
We’ll know a bit more at 1:30. But at this point, given the small megaphone of people who want to protect the middle class, I think the best strategy to rally around is to do nothing.