Analysis
Here are four broad reactions to the new proposal.
First, this is a short-term budget, not a long-term budget. There are three forces driving our long-run government spending and deficit problem:
- demographics;
- unsustainable growth in per capita health spending; and
- unsustainable promises made by past elected officials, enshrined in entitlement benefit formulas.
The President’s proposal addresses none of these forces. It instead spends most of its effort on everything but those factors. His proposed Medicare and Medicaid savings, while large in aggregate dollars, are quite small relative to the total amount to be spent on those programs, and he lets the largest program in the federal budget (Social Security) grow unchecked. While Bowles and Simpson focused their efforts on the major entitlements and also addressed other spending areas and taxes, the President’s proposal does the reverse, focusing on other mandatory spending, taxes, and defense. That’s a short-term focus.
Second, this proposal “feels” to me like the recently concluded discretionary spending deal. It’s the size of a typical deficit reduction bill that Congress usually does every five or so years. I’m sure the affected interest groups are even now preparing to invade Washington to explain how a 3-5% cut will devastate them. The problem is that our fiscal problems are now so big that they require much larger policy changes.
Third, while framed as a centrist proposal, the substance leans pretty far left. It’s deficit reduction through (triggered) tax increases on the rich, plus defense cuts, plus unspecified other mandatory cuts and process mechanisms that might cut Medicare provider payments. Centrist Democrat proposals do all of these things, but they also reform Social Security and Medicare, usually through a combination of raising the eligibility age, means-testing, and raising taxes.
Fourth, the President’s speech was campaign-like in its characterization of and attacks on the Ryan plan.
The President’s proposal could be the opening bid in a negotiation with Congressional Republicans. When you combine this substance with the President’s aggressive partisan attacks and framing of the Ryan budget, however, it’s hard to see how this leads to a big fiscal deal this year or next. A small incremental bill, which “cuts” spending by a couple hundred billion dollars over the next decade, is possible. But the chances of a long-term grand bargain in the next two years just plummeted from an already low starting point.
Michael Goodwin: O's in Fiscal Fantasyland
http://www.nypost.com/p/news/local/in_fiscal_fantasyland_Zv3ID2mIbVbl2hMuVpKkCM
Elections have conse quences, we are told, but the admonition usually refers to how results shape subsequent events. Yet as last week's huge battle over puny budget trims proved, America already is suffering from an election that is still 18 months away.
Blame President Obama. By waiting until Republicans offered a bold plan to address the staggering debt and deficit problems, then countering with a partisan attack that lacked any serious reforms, he signaled that no major changes will happen until voters speak in 2012.
Indeed, he defined his sketchy financial plan in pure political terms, saying it is "an attempt to clarify the choice that we have as a country right now."
Like many of Obama's claims, this one is both technically accurate and not true. Voters have a "choice" only to the extent that they must choose between fantasy and reality.
Obama's plan resides firmly in the fantasy camp. His vision is that America's financial problems can be fixed by raising taxes on 2 percent of the population. Everything else will take care of itself, or Congress will do something about it down the road.
His is not a plan as much as it is a placeholder while he tries to rally his party's ultra-liberal, anti-business base. He is already in cheap populism mode, telling supporters at a Chicago fund-raiser he "reformed Wall Street so you won't get cheated when you apply for mortgages or take out credit cards."
Contrast that with the more realistic vision of Republican Congressman Paul Ryan of Wisconsin. While Ryan's plan, passed Friday by the House, is incomplete and far from perfect, his starting point is honesty: The nation cannot continue on its current path because entitlement spending, especially for health care, will take the country over the cliff. No amount of tax hikes can keep up with the explosion of climbing costs and existing debt, or, as Ryan puts it: "We don't have a problem with our budget because Americans don't pay enough taxes. We have problems with our budget because we spend too much money."
He proposes fundamental changes to save nearly $6 trillion over a decade, including making Medicaid a block-grant program so states can administer it more efficiently. He also proposes a voucher program for Medicare for those under 55. Those already in the program or age 55 and above would not see any reduced benefits.
While both Republicans and Obama are guilty of pushing plans they know the other side won't accept, they are not equally guilty with regard to the fundamental problem. As Ryan argues, comparing his plan to what exists now, as Obama does, is "measuring us against a fiscal fallacy . . . against a future that's not going to happen."
Read more: http://www.nypost.com/p/news/local/in_fiscal_fantasyland_Zv3ID2mIbVbl2hMuVpKkCM#ixzz1Jpu5degk
President Obama was the spirit of full bipartisan cooperation in discussing Rep. Paul Ryan’s plan to reform Medicare and other fiscally challenged entitlement programs.
Fifteen months ago, that is.
“We’re not going to be able to do anything about any of these entitlements if what we do is characterized . . . as, well, you know, that’s — the other party is being irresponsible; the other party is trying to hurt our senior citizens,” the president told House Republicans back in January 2010.
“If we’re going to frame these debates in ways that allow us to solve them,” he said, “then we can’t start off by figuring out: a) Who’s to blame? b) How can we make the American people afraid of the other side?
“Unfortunately, that’s how our politics works right now,” Obama lamented.
But that was then.
Fast-forward to Wednesday, when Obama again tackled the question of budget and debt — demonizing Ryan by accusing him and the GOP of trying to hurt (if not outright kill) senior citizens.
Ryan’s entitlements plan, Obama charged, “says America can’t afford to keep the promise we’ve made to care for our seniors . . . It says [that], instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy insurance, tough luck.”
He accused the GOP of trying to reduce the deficit on the backs of “50 million Americans.”
And who are they? “Many are someone’s grandparents, who wouldn’t be able to afford nursing-home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome.”
So much for “serious conversations about Medicare and its long-term viability.”
So much for refusing to accuse the GOP of “trying to hurt our senior citizens.”
So much for not “fighting each other in some sort of political steel-cage match to see who comes out alive.”
Fifteen months ago, Obama warned that “all of us have a choice to make: We have to choose whether we’re going to be politicians first or partners for progress, whether we’re going to put success at the polls ahead of the lasting success we can achieve together for America.”
It’s pretty clear now which choice the president has made.
And it’s not the one in which America wins.
Peggy Noonan:
http://www.peggynoonan.com/article.php?article=569
An excerpt:
We all get stuck in the day-to-day and lose sight of the overarching, but the overarching fact of Mr. Obama’s presidency is that he made a bad impression his first years in office and has never turned that impression around. He spent his first 14 months moving on what he was thinking about—health care—and not what the public was thinking about—the economic crash, jobs, spending. He seemed not to be thinking like everyone else, which underscored the idea that he was unresponsive to the crises they were seeing. It’s hard to get past that.
His speech this week brought together all the strands of his flawed leadership. It was at moments clever, but merely clever, not up to the needs of the moment—and cleverness in a time of crisis comes as an affront. The speech seemed oblivious to recent history, as if the president had just discovered something no one knows about, a problem with spending, and has decided to alert us to the danger. He said other politicians attempt to cut by focusing on “waste and abuse,” but he knows the real secret: The problem is entitlement spending. But addressing entitlements is all anyone serious has been talking about for years; it’s what the Ryan plan is all about!
The speech was intellectually incoherent. An administration that spent two years saying, essentially, that high spending is good is suddenly insisting high spending is catastrophic. The president appealed for bipartisan efforts but his manner and approach leave his appeals sounding like diktats. His attempts to seem above the fray leave him seeming distanced and unwilling to risk anything.
Most important, the speech signaled that the White House, after all this time, sees the question of spending as a partisan tool, a weapon to be deployed in an election, and not an actual crisis. This is disrespectful toward citizens who feel honest alarm.
Because of these flaws, the speech will have no afterlife, and a major speech with no afterlife might as well not have been given.
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