Deficit reduction: Why it's smart for Obama to jump in late
President Obama will lay out his 'vision' for deficit reduction Wednesday, a week after the GOP released a 2012 budget proposing big cuts. He is well positioned to occupy the middle ground.
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That opens up a big opportunity for Obama with independent voters, who give high support to compromise – not grand partisan gestures. Obama and the Democrats’ last-minute dealmaking with the Republicans last Friday to avoid a government shutdown allowed the president to come across as a split-the-difference moderate, even if the Democrats ended up giving away a lot more than they intended.Skip to next paragraph
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But there are bright lines Obama probably won’t cross – and one of them is changing Social Security, which has many years of solvency left in its trust fund, according to liberal groups. Medicare and Medicaid are a different story. They are significant drivers of the nation’s looming fiscal crisis. Now that Ryan has put out a plan for radical change to both, Obama can jump in with something less dramatic but still claim he’s addressing the problem.
Signals of compromise
Until now, Obama has been saying that his health-care reform would end up saving money in the long run, and cites Congressional Budget Office numbers to bolster his assertion. Ryan crunches the numbers differently, and says his plan would save $1.4 trillion over 10 years by repealing Obama’s health-care reform.
Now, it appears, the Obama administration wants to move beyond the argument that his health-care reforms will save money, and is willing to contemplate further savings in federal health-care spending as a compromise.
“We’ve had a lot of savings in health care, [but] we have to do more,” senior White House adviser David Plouffe said on “Meet the Press” Sunday. “So you’re going to have to look at Medicare and Medicaid and see what kind of savings you get.”
Another major departure point for Obama vis a vis the Ryan plan is taxes. Ryan lowered the top marginal tax rate for both individuals and corporations to 25 percent. On Wednesday, Obama is expected to repeat his call for a tax increase on the wealthiest Americans, which he included in his budget. Though he dealt away that proposal in the tax compromise with Republicans last December, he is still keeping that idea on the table, almost as a symbolic marker, since the current Republican-controlled House would never pass it.
On a larger scale, Obama also faces public opinion. Polls show widespread concern over the nation’s skyrocketing debt – but not much willingness to make budget cuts, except in foreign aid (a minuscule fraction of the federal budget). Obama could scare the public by painting a picture of a nation in default over unmanageable debt, à la Greece. But that’s not his style. He likes to talk about investing in education, research and development, and infrastructure.
“Fear is the easy way to go, but if you want to connect with middle-class Americans, you have to talk about hope,” says Ryan McConaghy, director of the economic program at Third Way, a centrist Democratic think tank.