As President Obama prepares to deliver his first State of the Union Address tonight, he is being tugged in conflicting directions. His dilemma is simple, and familiar: independent voters want different things than liberals.
Independents and moderate Democrats worry about big government and deficits. Liberals want more government spending and regulation, and they think fiscal discipline is the death of progressive reform.
These tensions were on display yesterday as the Senate squelched a bipartisan proposal, endorsed by President Obama, to set up a special commission to tackle the nation’s growing fiscal crisis. Offered as an amendment to legislation increasing the debt ceiling, the proposal by Senate Budget Committee Chairman Kent Conrad (D-ND) and Ranking Member Judd Gregg (R-NH) attracted a bipartisan majority of 53 votes. But under the Senate’s tyranny of the supermajority, it needed 60 to pass.
To the independents who have been defecting from Obama’s winning 2008 coalition, it looked like yet another victory for the status quo in Washington. The defeat sets up a confrontation with Senate moderates, who have threatened to vote against raising the debt ceiling unless Congress empowers a commission to rein in the nation’s runaway deficits and debt. It may also prompt President Obama to revive his idea for setting up the commission under executive order. House Blue Dogs yesterday endorsed a commission as part of their plan for fiscal reform.
On the other side of the fiscal divide, many liberals have recoiled from Obama’s call for a three-year “freeze” on non-security discretionary spending, seeing it as a cave-in to budget hawks that will crimp progressive ambitions and possibly forestall economic recovery. Since the bill envisions only modest cuts in spending ($250 billion over the next decade) — none of which go into effect until 2011 when it won’t hinder the recovery — such fears seem overwrought. And Obama cushioned the blow by unveiling a new package of middle-class tax cuts.
Nonetheless, the president has a fine line to walk tonight. He must convince the country that he is taking decisive action to control government spending and deficits. And he must convince his party that big progressive reforms can advance within a framework that restores long-term fiscal stability.
Even as the commission went down, the Congressional Budget Office yesterday released new budget forecasts that underscore why Congress must begin laying the groundwork for a return to fiscal discipline in Washington. CBO projects this year’s deficit at $1.3 trillion. At 9.2 percent of GDP, that is slightly less than last year’s whopping 9.9 percent shortfall, which was the biggest in U.S. peacetime history. But while these short-term deficits are enormous, the more fundamental problem is the nation’s cascading national debt. CBO sees the debt nearly tripling from $5.9 trillion to $15 billion by the end of the decade, or from 53 to 67 percent of GDP, and that estimate is based on very conservative assumptions.
America piled up a similar load of debt after World War II, but at least we owed the money to ourselves. Unchecked, today’s borrowing binge means more dependence on Chinese and other foreign lenders to keep our economy afloat, more tax dollars siphoned off to service our debts, and a growing squeeze on public investment as automatic spending on the elderly crowds out everything else.
Given the magnitude of the problem, Obama’s proposed freeze is exceedingly modest. What’s more, it’s a flexible freeze, not an indiscriminate swipe of the budgetary ax. Congress can boost vital public investments – say in technological innovation and clean energy, as long as it is willing to pass offsetting program cuts. As Ed Kilgore has pointed out, the proposal would basically restore the budget “caps” that effectively restrained spending during the Clinton years.
The deficit commission is a bigger deal because it aims at the core of America’s long-term fiscal challenge: the automatic and unsustainable growth of spending on Medicare, Medicaid and Society Security. Congress, polarized along lines of party and ideology, and intimidated by pressure groups, has repeatedly shown itself incapable of slowing entitlement cost growth. Hence the Conrad-Gregg proposal for a bipartisan commission to develop a package of tax and spending changes, and present them to Congress for an up or down vote.
The president tonight should challenge both anti-tax conservatives and pro-spending liberals to get serious about entitlement reform. And he should use the occasion to spell out for skeptical independents why health care reform is indispensible to controlling public spending. Coupled with a strong message on jobs, a forceful presidential commitment to restoring fiscal discipline in Washington will boost economic confidence and help to bring independents back into the progressive fold.
