This week the president faced the American people to talk about, among other things, the budget. He said the right things. During his State of the Union address on Tuesday night, he drew a link between responsible fiscal policy and the important issues of jobs, the middle class and economic growth. He emphasized the need for fiscal responsibility.
He pointed out that while some savings have been accomplished, there's still much to be done. But his objective of saving another $1.5 trillion falls well short of what is needed to put the debt on a sustainable path. A recent analysis by the Committee for a Responsible Federal Budget found that a minimum of $2.4 trillion in additional savings is needed to achieve that basic goal.
He acknowledged that compromise will have to drive negotiations and that no one will see a deal come together exactly as they would choose. But when it comes to specifics, the president continues to take the easy way out, instead of using the platform that he alone has to help the country understand both what's at stake and what it will take. It's relatively easy to talk about things like scaling back tax loopholes for corporations and the well-off, asking the rich to pay more as part of Medicare, and providing fewer subsidies to drug companies. But it will take more than that.
Instead of just replacing or retooling the blunt sequester, we do need to find savings from defense. We also need to put Social Security on a path toward solvency and the sooner we do it the better. We should protect those who depend on the program, and running from the financial imbalances it faces does just the opposite.
Tax reform also will require tackling popular, yet expensive and inefficient, tax breaks -- from the health care exclusion to the home mortgage deduction -- if we truly want to overhaul our outdated and anti-growth tax code. Reforming the tax breaks for the rich and well-connected is a must, but it's not enough to really fix a tax code that hemorrhages more than $1 trillion in forgone revenues a year.
The bottom line is deficit reduction is difficult, the president knows that, and he should start an honest dialogue with the American public about what it will take to help move the issue forward.
The emphasis he put on the issue this week was encouraging, but the proof will be in how he leads going forward. In recent fiscal negotiations, we have been locked in a game of you go first, no you go first between the two parties when it comes to how they would get specific on entitlement and tax reform. The risk is that both will find it too politically convenient to hide behind the easy pieces of taxing the rich and discretionary spending caps--both of which have been enacted, and neither of which are sufficient to fix the problem—instead of focusing on the real issues of entitlement and tax reform.
Only the president can start this honest dialogue. If he steps forward and starts putting real specifics on the table for some of the hard choices and uses his platform to explain to the country why it is so important not to duck from these issues as we work to get the economy back on track, his speech will have been a great start to a serious effort. Otherwise, it will be just a lot of empty words.
