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)
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Ron Fournier
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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”

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