Thursday, April 14, 2011

Budget Reform Postponed

Reporting last November, the President's National Commission on Fiscal Responsibility and Reform known as Simpson-Bowles turned in their report. It was a well-thought out blueprint containing spending cuts and tax reform. It should have been a starting point had the President given it his support. He did not.

That created an opening for the Republican plan. It is far more ambitious and several parts of it are politically unworkable. It would not actually balance the budget but it would keep it within historic limits. Parts such as corporate tax reform seem overdue. Not to be outdone, the Progressive Caucus also released their version. It boils down to soak the rich and ignore structural problems in Social Security, Medicare, and Medicaid.

Normally this would be a good time to address the deficit and long-term debt. The deficit is unsustainable, the national debt is approaching a historic high and interest on the debt threatens all other spending.

This is when the government usually passes controversial legislation. It is an off year for elections and Congress still has a fresh mandate.

But, President Obama made sure that nothing will happen. He has already launched his reelection campaign and yesterday's speech on the budget showed that he is already in campaign mode. He is more concerned with scoring political points than with solving problems. His solution consists largely of blaming everything on the Bush administration and reversing part (but not all) of Bush's tax cuts. He also proposed what might turn into death panels to control medical costs. His goal is to cut spending by $4 trillion over 12 years (that would be 10 years after the end of his current term). It would not actually balance the budget and would add trillions more debt than the Republican plan.

By turning the budget into an election issue more than a year and a half before the election, Obama has assured that no progress can be made until after the 2012 election. Possibly he did that on purpose. Maybe he thinks that he will enter 2013 with a more sympathetic Congress.

Neither side is being totally truthful with the public. The Republicans cannot cut enough to balance the budget and the Democrats will have to tax more than just the rich. Congress needs to make some hard choices quickly - something along the lines of Simpson-Bowles. They still have 2012 to mollify the public over unpopular choices. Instead Congress and the President will spend the next year and a half making political points instead of accomplishing anything.

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