Other CRFB Papers

Op-Ed: Obama’s Legacy Rests on Reducing the Debt

The Hill | April 26, 2013

Second presidential terms build legacies, and this president’s will be tied solidly to the decisions he makes about the national debt and the budget. He cannot leave the office with the debt approaching $20 trillion and expect history will look kindly upon his fiscal management of the nation.

So how is he doing in the first 100 days on this front? He is off to a good start, and it is certainly a lot better than he did in his last four years.

The budget President Obama offered was more serious than many of his other recent proposals. By including the chained CPI — a technical improvement to how we measure inflation that would help to extend the life of Social Security and increase revenue for the federal government — he sent a real signal that he is willing to discuss the kinds of more serious entitlement reforms that will have to be part of any deal.

And his so-called “charm offensive” seems to be going well. It is nothing short of absurd how little the president has interacted with members of Congress — including those from his own party — on these issues in the past. And the dinner series he initiated seems to be helping to start a real discussion. It’s hard to solve problems when no one is even talking.

But the real question is where this goes in the next 100 days. There isn’t much time; we need to get a deal hammered out before the country hits the debt ceiling late this summer or early fall.

This will take a lot more than raising tax rates on the rich, or even grudgingly dipping his toe in entitlement reform, as the president has talked about so far. While it is laudable that we have reduced the deficit in the past two years from where it otherwise would have been, we have only done the relatively easy policies thus far. Putting in place spending caps where you don’t have to specify what programs will change (and you have to count on Congress to make the promised savings stick — not a great track record here) and raising tax rates on the very well off are a start.

Next up: the tough stuff.

All told, we have achieved about half of the savings we need to reach a minimum target. Now in the next tranche, we have to tackle the much harder parts: entitlement and tax reform. The good news is that the tax committees are making impressive progress on moving forward with tax reform, which would broaden the base; lower rates; simplify the system; make it far more equitable and competitive; and raise revenue for the federal government in a much better way.

Where the president is going to have to really use his leadership is to help make the case for entitlement reform and why we have to make the needed changes to control healthcare costs and adjust the nation’s retirement system for growing life expectancies. He should make the case to Democrats on why they should prefer Social Security and Medicare reform under his presidency, and he needs to make the case to the nation as a whole about why putting a fiscal deal in place is so important and how the economic recovery will not take off without one.

And that will be part of the test. The president’s style has been to put an issue on the agenda and then take a huge step back right out of the room. That’s not going to work on this one.

The specifics are difficult and come with political risks. He will have to own the tough policy choices right along with the Democrats and Republicans in Congress.

And in order to make this work, he will have to use the bully pulpit as only the president can. He must make the case to the country for why a reformed tax code will make us more competitive, why we need to address the problems with entitlements in order to strengthen those programs, why a smart budget deal is part of an economic recovery strategy, why fixing the budget now will help us to preserve a strong safety net, and why we have to make the necessary investments we have been shortchanging for so long.

A few major speeches around the country laying these issues out would make a world of difference.

President Obama made a small down payment on his legacy in his first 100 days. Now he must invest a lot more political capital to make sure it pays off.

Op-Ed: Parties Should Stop Talking Past Each Other and Fix the Debt

The Hill | April 10, 2013

When it comes to the federal budget standoff, those looking for a breakthrough are caught between a rock and a hard place. One side offers all cuts and no revenues to reach a balanced budget. The other offers tax increases with some spending cuts to appear even handed, but never actually moves the nation’s finances from red to black.

Uncertainty over the ultimate solution has businesses keeping capital on the sidelines, waiting to see what the playing field will look like in the months ahead. It is time to get a big deal to fix the nation’s debt and deficit problems and get everyone back in the game.

Dante once wrote, “The hottest places in hell are reserved for those who, in times of great moral crisis, maintain their neutrality.” It is time to turn up the heat on those who remain in their corners without a passable solution.

Washington leaders have gotten quite good at taking the easy way out. The time to say goodbye to short-term fixes is long overdue. President Obama’s outreach efforts on Capitol Hill are a good start, but he has remained aloof for far too long. House Speaker John Boehner must lead his conference, rather than settling for lockstep opposition.

Every kick sends an opportunity to get serious about the nation’s debt and deficit a few months into the future, to the detriment of the economy’s long-term prosperity. Market forecasters Macroeconomic Advisors predict that the threat of a default on the nation’s credit card could reduce GDP by one half of a percentage point. That sort of self-inflicted wound could be fatal to a sluggish economy, and it is incumbent upon everyone to make sure it doesn’t happen. It will require the hard work and will of the White House, both chambers in Congress, and most importantly the collective voice of the American people.

Since almost everyone acknowledges that there is a problem, the next step is to evaluate the potential solutions. Rather than applying yet another half-trillion dollar Band Aid as Washington has done since 2011, legislators should make the next attempt mean something and make a sizeable dent in the nation’s deficit.

So far, participants in the discussion have fallen into three general groups: snake oil peddlers, wafflers, and true patriots.

The peddlers try to convince the public that this problem can be solved without revenues or changes to entitlement programs. It’s certainly possible to do that on a spreadsheet, but the approach is politically untenable. People who insist on a plan that has no hope of passage are not a contributing to the discussion. They need to pipe down or be shunned into silence.

Wafflers agree that something must be done, but steer clear of presenting or advocating an honest solution. These members should be encouraged to go all the way and embrace a plan. If they are unwilling or unable to do that, they should move on and give someone else the chance.

Finally, our true patriots should be commended for getting out on the front lines and proposing a solution. The answer doesn’t have to be loved by everyone. Given that it will require hard choices and shared sacrifice from all, it may not be popular. That’s why groups like Fix the Debt stand ready to support those that are willing to make the tough choices necessary to get the nation’s finances back on track.

This is the president’s contest to lose. Approaching fiscal matters a half a trillion dollars at a time ensures that this will be all anyone talks about, crowding out second term priorities such as immigration and gun legislation. If he wants to start ensuring his legacy, the president should kick his outreach efforts into overdrive. Speaker Boehner should use this opportunity to show that his conference can do more than say “no,” that it is open to constructive ideas that truly solve common problems.

The best part about the deal will be the dawn. As the cloud of uncertainty surrounding the nation’s fiscal future dissipates, Americans will once again be able to see the bright lights of our nation’s economic strengths. America can continue to be a beacon of hope and opportunity, but only if we act.

Syndicate content