We Are All Deficit Cutters Now
12:00 AM, Apr 16, 2011 • By IRWIN M. STELZER
There is more, a lot more. Obama would rely on triggers that cut spending if certain deficit reduction targets are not met by 2014, and Ryan on reducing the inflation in health care costs to the lower level of general inflation. The president knows that although he will not have to face the voters in 2014, the Congress he is counting on to swing into action and cut spending will. And Ryan must know that an ageing population will demand increases in health care services that are likely to drive up costs under almost any system of provision.
It is unlikely that a grand bargain, rather than a messy stopgap compromise can be struck during the upcoming debate on raising the $14.3 trillion debt limit, a ceiling that will be hit sometime between May 16 and July 8. That will have to wait for vox populi to be heard in the 2012 election. The president knows he cannot face the voters as a deficit denier or deal wrecker, and the Republicans know that placing all of the burden on those most reliant on government services, while protecting higher earners from any increase in taxes, is likely to push the undecided in the president’s direction.
The initial reaction of both sides should have been predictable. John Boehner, leader of the Republican majority in the House, rejects Obama’s plan, saying proposed tax increases are “a non-starter” because it is spending, not a revenue shortfall that is fueling the deficits. Harry Reid, leader of the Democratic majority in the Senate, dismisses the Ryan plan as “shallow … posturing on the deficit [that] is just an attempt to distract from their bankrupt ideas.” More important, the president, in full campaign mode, did not contribute to an atmosphere of civil bipartisan discussion by personally attacking Paul Ryan, whom he had invited to take a front-row seat while he presented his own plan, for offering “nothing serious or courageous” and, in the words of the Wall Street Journal, “pitting ‘children with autism or Down’s syndrome’ against ‘every millionaire and billionaire in our society.’” Ryan responded that “rather than building bridges [the president] is poisoning wells.” Designated conciliator Vice President Joe Biden has his work cut out for him, as do the bipartisan deficit reduction commission and the “gang of six” legislators, both groups groping for an acceptable compromise.
None of this should be allowed to obscure the good news. The nation is to be treated to a real debate over just what it wants to be in this 21st century. And it is being asked to discuss the right questions: what should be the balance between the role of government and the place of the individual? How much should current generations party at the expense of their children and grandchildren? What is a fair balance between reductions in entitlements and increased taxes on the better-off? How dependent does America want to be on continued financing by the Chinese regime and other foreign countries?
The world awaits the answers. The International Monetary Fund, pointing out that the U.S. is the only advanced economy to increase its underlying budget deficit in 2011, and with the exception of Japan the only country with its debt scheduled to rise in 2016, says that our failure to rein in the deficit “would have very important consequences for the rest of the world.” The world has a bit less to worry about on this score than before the issue was joined last week. All thanks to Congressman Ryan for forcing the president and his own party to move the deficit onto center stage and perhaps proving that Winston Churchill was right in saying, “Americans can always be counted on to do the right thing—after they have exhausted all other possibilities.”