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Published: Sunday, 4/17/2011

Budget talks must be more than usual politics

BY DAVID KUSHMA
BLADE EDITOR

The budget compromise that President Obama and top lawmakers finagled to avert a government shutdown was dispiriting enough. Even more depressing is the knowledge that the bout was only the undercard, and the main event promises to be even uglier.

Now that they have resolved this year's budget -- more than six months after the fiscal year began -- Congress and the White House still need to pass next year's budget, with trillions, not mere billions, of dollars in dispute. Lawmakers also must agree in the next few months to raise the federal debt ceiling, so the government can continue to borrow money to help pay its debts.

And as the numbers of zeroes grow in the figures at stake, Republican lawmakers already have made clear that their demands will grow accordingly. House Speaker John Boehner of Ohio says he'll want "something really, really big" in exchange for a higher debt limit. Republicans will point out that then-Senator Obama voted against raising the limit in 2006.

Last week, though, President Obama finally articulated in his budget speech a clear and appealing alternative to the GOP vision of a government that provides more for the haves at the expense of the have-nots. I hope the President follows through on the convictions he expressed. In any event, the 2012 campaign has begun in earnest.

The Republican strategy has worked so far. It worked after last November's election, when Mr. Obama accepted an extension of George W. Bush's regressive tax cuts to prevent Senate Republicans from filibustering legislation needed to help the other 98 percent of Americans.

It worked this month, when the President swallowed budget reductions he initially resisted because of the continued weakness of the economy, and then turned around and claimed credit for the "largest annual spending cut in our history."

Those cuts include such things as investments in public infrastructure needed to prevent the next bridge collapse. There will be less money to fight pollution, to combat disease, to feed poor children. While domestic discretionary programs took the hit, Pentagon spending grew. The best the President could do was keep the cuts from being worse.

And even then, they weren't enough for some GOP lawmakers who wanted $61 billion in cuts, or $100 billion, or whatever the demand became the next time they decided to move the goalposts. Unwilling to take yes for an answer, Tea Party groups in Ohio called the spending cuts "minimal" and praised state Republicans who voted against the deal.

But for all the self-congratulation the President and congressional leaders engaged in after their agreement, a lot of other Americans across the political spectrum don't seem too impressed.

"They're haggling over a couple of billion dollars when the [deficit] is a trillion-four," Stephen Steinour, chairman of Huntington Bancshares, said during a visit to The Blade last week. "We need a deal on the deficit that doesn't leave our great-grandchildren encumbered."

President Obama's budget speech last week was encouraging in that he acknowledged the need to control the growth of spending on entitlement programs such as Medicare and Medicaid, and offered concrete proposals to do so. His fiscal reform commission made that point last year, and the "gang of six" bipartisan senators who are working on a long-term budget agreement has repeated it, but he has mostly ignored it until now.

Mr. Obama had no choice but to respond after the House Republican majority offered a plan for the next fiscal year that would turn Medicare into a private voucher program and Medicaid into a block grant -- thus dumping the health-care programs' problems on the old and sick and poor people who rely on them and on already battered state governments. Nobody's talking much about fixing Social Security, but that's part of the solution, too.

But the President made another critical point: As necessary as painful spending cuts are, the budget won't be balanced and the deficit won't be eliminated without more revenue -- closing tax loopholes, limiting deductions, and ending unbalanced and unnecessary tax cuts. Although the President properly targeted the wealthiest individuals and corporations, middle-income households can't escape some pain, either.

Will Republicans concede that reality? Why should they? Their plan calls for even more tax cuts. They take their cue from Charlie Sheen: "Winning!"

The next showdown will start next month, when Congress will debate increasing the ceiling on federal borrowing above the current limit of $14.3 trillion. If the debt ceiling isn't raised, the government can't pay its bills and goes into default.

Should that happen, the United States turns into Portugal or Greece or Ireland. And even if the dispute is resolved quickly, investors will go elsewhere and creditors will demand higher interest rates to lend to the United States.

Which increases the deficit. So much for fiscal responsibility.

If Republicans want to talk about genuine deficit-reduction measures and budget reform in return for their votes on increasing the debt limit, the White House should invite that discussion, and insist on putting revenue on the agenda. But it should not become just another exercise in eleventh-hour brinkmanship, or an exchange of partisan trash-talking.

Are serious budget negotiations possible during the year-and-a-half election campaign that has just started? That will depend on whether the parties are more concerned with prevailing in the short term or securing the country's future in the long term.

The prospect isn't bright, but we have to hope that the "adult conversation" Washington says it wants will be conducted by adults.

David Kushma is editor of The Blade.

Contact him at: dkushma@theblade.com



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