What Your Party Leaders Aren’t Telling You About The Debt

They’re thinking only about the short-term, and that will backfire on conservatives and liberals both.

House Minority Leader John Boehner (R-OH) walks past US President Barack Obama(L) to introduce Obama prior to him speaking at the Republican GOP House Issues Conference in Baltimore, Maryland, January 29, 2010. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
National Journal
Ron Fournier
Feb. 25, 2014, 12:43 a.m.

Short-term think­ing killed the “Grand Bar­gain,” the myth­ic­al com­prom­ise to avert a fisc­al crisis that Demo­crats and Re­pub­lic­ans know is un­avoid­able without slash­ing en­ti­tle­ment spend­ing and/or rais­ing taxes.

Long-term think­ing “¦ well, there is none of that in Wash­ing­ton. Be­cause long-term think­ing re­quires cour­age and trans­par­ency, and such traits are dead to this town. Al­low me to high­light two facts that Pres­id­ent Obama and House Re­pub­lic­ans, cow­ardly, don’t want their fol­low­ers to know.

Delay­ing an agree­ment to tame the $17.3 tril­lion debt will back­fire on lib­er­als. Obama said it best him­self, re­peatedly, when he de­fied (or gave the pre­tense of de­fy­ing) his most lib­er­al sup­port­ers by of­fer­ing mod­est en­ti­tle­ment cuts. “The biggest driver of our long-term debt is the rising cost of health care for an aging pop­u­la­tion,” he ar­gued last year, adding that “those of us who care deeply about pro­grams like Medi­care must em­brace the need for mod­est re­forms — oth­er­wise, our re­tire­ment pro­grams will crowd out in­vest­ments we need for our chil­dren, and jeop­ard­ize the prom­ise of a se­cure re­tire­ment for fu­ture gen­er­a­tions.”

That equa­tion hasn’t changed. At its cur­rent course, the na­tion’s debt will be 74 per­cent of gross do­mest­ic product by year’s end, 79 per­cent of GDP by 2024 and 100 per­cent of GDP by 2038. The de­fi­cit re­duc­tion Obama now brags about? It’s an ab­er­ra­tion. The pres­id­ent knows ““ but does not tell Amer­ic­ans ““ that, bar­ring a budget deal, an­nu­al de­fi­cits will be­gin rising again in the next two or three years as the pop­u­la­tion ages.

One thing that has changed is Obama’s polit­ics. With his re-elec­tion be­hind him and mid-term elec­tions loom­ing, Obama can ig­nore com­prom­ise-seek­ing in­de­pend­ent voters and pander to his base. Last week, he dropped from his budget a plan to re­duce the cost-of-liv­ing ad­just­ment for So­cial Se­cur­ity re­cip­i­ents. As Brett Lo­Gi­ur­ato wrote in Busi­ness In­sider, Obama felt pres­sure from the left. “Led by Sens. Tom Har­kin (D-Iowa), Sher­rod Brown (D-Ohio), and Eliza­beth War­ren (D-Mass.), many Demo­crats now not only op­pose the cuts, but also fa­vor an ex­pan­sion of So­cial Se­cur­ity be­ne­fits.”  

Delay­ing an agree­ment to tame the $17.3 tril­lion debt will back­fire on con­ser­vat­ives. Lib­er­al colum­nist Jonath­an Chait ar­gued that point:

“While I don’t come close to shar­ing their bug-eyed fear about the scope of the long-term de­fi­cit, I do agree that at some point, a fisc­al cor­rec­tion will prob­ably be needed. Now here is an im­port­ant polit­ic­al-eco­nom­ic real­ity un­der­gird­ing this long game. It’s polit­ic­ally feas­ible to cut fu­ture re­tire­ment be­ne­fits, but it’s not feas­ible to cut cur­rent re­tire­ment be­ne­fits (as even Re­pub­lic­an hard-liners agree.) The longer any such cor­rec­tion is post­poned, the longer cur­rent be­ne­fits are locked in. Every year a deal is delayed, the harder it gets to cut spend­ing, and thus the easi­er it gets to raise taxes. Bol­ster­ing this real­ity is a simple polit­ic­al dy­nam­ic: cut­ting re­tire­ment be­ne­fits is wildly un­pop­u­lar. If forced to choose, people would over­whelm­ingly prefer to raise taxes.”

Chait seems to think that once Wash­ing­ton is forced to con­front the oft-punted fisc­al crisis, tax in­creases will be the only fix on the table. My sus­pi­cion is that en­ti­tle­ment cuts will re­main in play, even if we wait so long that cur­rent re­tir­ees are tar­geted. The crisis (Chait calls it a mere “fisc­al cor­rec­tion”) will be that bad. Des­pite our dis­agree­ments, on this Chait and I agree: A price for delay­ing com­prom­ise is high­er taxes.

Our lead­ers can delay, dis­tort and lie about the facts, but they can’t wash them away. Both parties needed the Grand Bar­gain. That brings me to two ques­tions I hear every day:

Is the GOP more to blame than the White House? I think so, a bit more than Demo­crats, be­cause of Speak­er John Boehner’s in­ab­il­ity to rally the hard-right GOP House be­hind a tax com­prom­ise to match Obama’s of­fer on en­ti­tle­ments. But that should be no solace to lib­er­als or to Obama; their agenda and his leg­acy are yoked to the Grand Bar­gain.

Does Obama share some blame? You bet, quite a bit. Don’t for­get, he squeezed tax in­creases out of Re­pub­lic­ans after his 2012 re-elec­tion, claim­ing them as his “man­date” rather than lever­aging them for a Grand Bar­gain. That was a huge mis­take, a stroke of ar­rog­ance that will haunt his place in his­tory. Obama sur­rendered to GOP in­transigence rather than over­com­ing it, be­com­ing a host­age of a Wash­ing­ton cul­ture he was twice elec­ted to change. But this should be no solace to con­ser­vat­ives or to Boehner; their agenda and his leg­acy are yoked to the Grand Bar­gain.

See what I mean? Re­gard­less of your polit­ics, short-term think­ing is a killer.

RE­LATED: “Crappy Job: How Obama and Boehner Stink on the Debt”

What We're Following See More »
STAFF PICKS
When It Comes to Mining Asteroids, Technology Is Only the First Problem
2 days ago
WHY WE CARE

Foreign Policy takes a look at the future of mining the estimated "100,000 near-Earth objects—including asteroids and comets—in the neighborhood of our planet. Some of these NEOs, as they’re called, are small. Others are substantial and potentially packed full of water and various important minerals, such as nickel, cobalt, and iron. One day, advocates believe, those objects will be tapped by variations on the equipment used in the coal mines of Kentucky or in the diamond mines of Africa. And for immense gain: According to industry experts, the contents of a single asteroid could be worth trillions of dollars." But the technology to get us there is only the first step. Experts say "a multinational body might emerge" to manage rights to NEOs, as well as a body of law, including an international court.

Source:
STAFF PICKS
Obama Reflects on His Economic Record
2 days ago
WHY WE CARE

Not to be outdone by Jeffrey Goldberg's recent piece in The Atlantic about President Obama's foreign policy, the New York Times Magazine checks in with a longread on the president's economic legacy. In it, Obama is cognizant that the economic reality--73 straight months of growth--isn't matched by public perceptions. Some of that, he says, is due to a constant drumbeat from the right that "that denies any progress." But he also accepts some blame himself. “I mean, the truth of the matter is that if we had been able to more effectively communicate all the steps we had taken to the swing voter,” he said, “then we might have maintained a majority in the House or the Senate.”

Source:
STAFF PICKS
Reagan Families, Allies Lash Out at Will Ferrell
2 days ago
WHY WE CARE

Ronald Reagan's children and political allies took to the media and Twitter this week to chide funnyman Will Ferrell for his plans to play a dementia-addled Reagan in his second term in a new comedy entitled Reagan. In an open letter, Reagan's daughter Patti Davis tells Ferrell, who's also a producer on the movie, “Perhaps for your comedy you would like to visit some dementia facilities. I have—I didn’t find anything comedic there, and my hope would be that if you’re a decent human being, you wouldn’t either.” Michael Reagan, the president's son, tweeted, "What an Outrag....Alzheimers is not joke...It kills..You should be ashamed all of you." And former Rep. Joe Walsh called it an example of "Hollywood taking a shot at conservatives again."

Source:
PEAK CONFIDENCE
Clinton No Longer Running Primary Ads
2 days ago
WHY WE CARE

In a sign that she’s ready to put a longer-than-ex­pec­ted primary battle be­hind her, former Sec­ret­ary of State Hil­lary Clin­ton (D) is no longer go­ing on the air in up­com­ing primary states. “Team Clin­ton hasn’t spent a single cent in … Cali­for­nia, In­di­ana, Ken­tucky, Ore­gon and West Vir­gin­ia, while” Sen. Bernie Sanders’ (I-VT) “cam­paign has spent a little more than $1 mil­lion in those same states.” Meanwhile, Sen. Jeff Merkley (D-OR), Sanders’ "lone back­er in the Sen­ate, said the can­did­ate should end his pres­id­en­tial cam­paign if he’s los­ing to Hil­lary Clin­ton after the primary sea­son con­cludes in June, break­ing sharply with the can­did­ate who is vow­ing to take his in­sur­gent bid to the party con­ven­tion in Phil­adelphia.”

Source:
CITIZENS UNITED PT. 2?
Movie Based on ‘Clinton Cash’ to Debut at Cannes
2 days ago
WHY WE CARE

The team behind the bestselling "Clinton Cash"—author Peter Schweizer and Breitbart's Stephen Bannon—is turning the book into a movie that will have its U.S. premiere just before the Democratic National Convention this summer. The film will get its global debut "next month in Cannes, France, during the Cannes Film Festival. (The movie is not a part of the festival, but will be shown at a screening arranged for distributors)." Bloomberg has a trailer up, pointing out that it's "less Ken Burns than Jerry Bruckheimer, featuring blood-drenched money, radical madrassas, and ominous footage of the Clintons."

Source:
×