A month remains for President Obama and Congress to figure out how to avoid joining hands and jumping off the fiscal cliff.
That’s the overworked metaphor for a $700 billion austerity package that will automatically sock nearly every American who pays income and/or payroll taxes, and will mandate deep cuts in military and domestic spending, unless our ostensible leaders can agree on a less-dire alternative to start to reduce the nation’s long-term debt.
But it seems Washington’s partisan posturing and bluffing and hostage-taking could continue until Santa comes down the chimney, or until the ball drops in Times Square, if not later. That’s how national policy gets made these days.
“Fiscal cliff” is a misnomer, of course. The crisis is not fiscal but political — a reflection of the parties’ refusal to make political concessions on the budget even when the stakes include plunging the nation back into recession.
Republicans won’t hear of raising tax rates even modestly on the wealthiest 2 percent of Americans, the deficit — and last month’s election results — be damned. Democrats are loath to talk about reform of entitlements, even though Social Security, Medicare, Medicaid, and related programs account for 60 percent of the federal budget.
Some GOP lawmakers now acknowledge the need for more revenue as part of a compromise, even if that means they have to put the interests of the voters who elected them ahead of their fealty to Grover Norquist and his no-tax-forever gospel. But they won’t be pinned down on how they would raise such revenue, other than to insist they won’t roll back the George W. Bush tax cuts for the richest taxpayers (few politicians of either party object to keeping those cuts in place for less-affluent Americans).
Republicans talk about eliminating tax “loopholes” or limiting deductions, but won’t identify them in detail or say how much revenue they’re prepared to raise. Yet such double talk is supposed to represent a huge concession.
And instead of narrowing the topics of negotiation with the President and other Democrats, House Speaker John Boehner of Ohio seems intent on weighing down the agenda even more. He says changes to Obamacare must be part of the talks, although the election made clear that Americans don’t want to repeal, or drastically scale back, the health-care reform law. He is threatening to hold hostage the next increase in the debt ceiling.
What else would you put on the table, Mr. Speaker? Women’s suffrage?
In return, Republicans demand that Democrats agree to reductions in entitlements. Mr. Obama said during his re-election campaign that a budget deal might include $2.50 in spending cuts for every dollar in tax increases. It’s hard to see how to achieve that ratio solely by cutting discretionary spending on such things as education, transportation, environmental protection, and infrastructure repair.
Even if you could, it wouldn’t be desirable; the idea is to avoid the slashes in discretionary spending that a plunge from the fiscal cliff would require. Mr. Obama said last week he wants Congress to enact a new economic stimulus package that would encourage businesses to hire more workers and an extension of unemployment benefits.
So far, Mr. Obama has restrained increases in Medicare spending by limiting payments to health-care providers. Democrats, and their labor and elder allies, resist targeting recipients to curb costs. But as the population ages and health-care costs continue to rise, slowing the long-term growth of entitlements has to be part of the solution.
U.S. Rep. Dennis Kucinich said last week that poor and middle-class Americans “know all about the fiscal cliff — they’ve been getting pushed off it for years.” The lame-duck Cleveland Democrat called for “protection” of Social Security and Medicare.
But some entitlement reforms need not, as he warns, “balance the budget on the backs of seniors and America’s most vulnerable.”
You could index the rate of growth of Social Security cost-of-living adjustments to a more-realistic measure of inflation, as Mr. Obama has proposed. You could enable Medicare to negotiate bulk discounts from drug makers on the prescription drugs it buys.
You could “means-test” entitlements so that wealthier recipients would pay more in Medicare premiums and get less in Social Security benefits. You could raise the ceiling on income that is subject to the Social Security payroll tax.
Raising the age of eligibility for Social Security and Medicare should be a last resort, since it would require more Americans to work longer and reduce their total benefits. But it can’t be ruled out as an element of broader change.
The best way to save money in Medicare and Medicaid is to make health-care delivery more efficient. That won’t occur this month, but Mr. Obama and Congress can help set the tone.
At the same time, while the plunge from the fiscal cliff would cut Pentagon spending too deeply and indiscriminately, some strategic cuts would not jeopardize national security: tightening up defense contracting, improving management of big weapons systems, closing unneeded bases overseas.
The clock is ticking. The time for tiresome partisan posturing ended a long time ago. Polls show that more than two-thirds of Americans agree that balanced budget reform must include tax increases and spending cuts.
If the President and lawmakers can’t agree on tough choices now to treat their self-inflicted political wounds and get the debt under control, that job will just get harder and costlier. Failing to act will threaten recovery and impede the long-term economic growth that remains the best approach to shrinking the deficit.
Give us all a holiday present, Washington: Do your job.
David Kushma is editor of The Blade. Contact him at: email@example.com