Obama Faces Dilemma on Deficit-Trimming

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ObamaPresident Barack Obama has tough choices to make if he wants Congress to swallow bitter medicine to cut the nation’s deepening debt.

He can emulate Ronald Reagan, who made an ideological about-face and muscled through unpopular increases in Social Security taxes and trimmed benefits. Or he can mirror George W. Bush, who took a hands-off approach to his bipartisan tax panel’s call for eliminating popular tax breaks and wound up with nothing.

Thus far, Obama seems to be following the Bush model, giving the 18-member bipartisan panel breathing room and withholding comment on proposals offered by co-chairmen Erskine Bowles and Alan Simpson.

But that stance may change on Friday when the commission takes a final vote on a tough assortment of spending cuts and tax hikes designed to assure the federal government’s fiscal solvency and to trim almost $4 trillion from projected deficits through 2020.

White House spokesman Robert Gibbs suggested Obama will take a more active role once the commission votes, and may incorporate some of the Bowles-Simpson items in the new budget he sends Congress in February.

But the president is in a predicament as he faces a moment of decision. If he endorses the kinds of tough-medicine proposals advocated by the commission’s leaders, especially in pressing for more austerity in social programs, including on “entitlement” spending for Medicare and Social Security, it will mean turning away from his liberal base and some campaign promises.

While it’s unlikely the panel’s leaders can muster the 14-vote supermajority needed to send the package directly to Congress, chances are good that a majority of the commission will back it, even if some are holding their noses.

The plan won the support on Thursday of conservative GOP Sens. Tom Coburn of Oklahoma and Mike Crapo of Idaho, bringing to nine the number of commission members to publicly support it so far. Majority support from the commission could give it important momentum in Congress.

The Bowles-Simpson plan would raise the Social Security retirement age to 68 by 2050 and 69 by 2075 and reduce future increases to benefits, raise the gasoline tax, trim or eliminate many popular tax breaks including the home mortgage deduction, and slash military spending and the size of the federal work force.

There have been scores of bipartisan panels over the years addressing a host of dire problems facing the nation. Few of their recommendations have left much of a mark.

One exception is the National Commission on Social Security Reform, created by Congress and Reagan in 1981 to deal with a fast-approaching Social Security train wreck.

With the program near insolvency, the panel recommended a series of tough proposals that were politically unpopular. But Congress went along with most of them and in 1983 enacted an overhaul law that raised the retirement age gradually from 65 to 67, trimmed some benefits, delayed cost-of-living increases and raised Social Security taxes.

Those changes put the retirement insurance program on firm financial footing well into the 21st Century.
But Obama might have a hard time following in Reagan’s footsteps.

For one thing, the atmosphere is far more polarized now. And there are fewer centrists on either side of the aisle.

And it wasn’t commission Chairman Alan Greenspan and other commission members that drove the recommendations to acceptance in Congress.

It was Reagan, that champion of smaller government and lower taxes, who did an ideological about face and worked with congressional Democratic leaders, especially House Speaker Thomas “Tip” O’Neill, to line up the needed votes.

“There was a certain amount of chemistry between O’Neill and Reagan, which there clearly is not between Obama and the Republicans in Congress,” said Ross Baker, a political science professor at Rutgers University.

In 1983, Baker was on a leave of absence from teaching and working as an assistant to the House Democratic caucus.

“I heard the anguished tales of Democrats, particularly those representing districts with large numbers of seniors, coming back and saying they were practically lynched when they tried to explain to their constituents that their cost-of-living adjustments would be postponed by six months,” Baker said.

Reagan was also able to count on a band of more fiscally conservative Democrats — then called “Boll Weevils” — to get much of his agenda through Congress. The already diminished ranks of centrist Democrats and moderate Republicans were further reduced in last month’s midterm elections.

Bush had little success with bipartisan panels. He set up ones on Social Security reform and overhauling the tax code, but little came of either. In 2005, when his tax-code commission, chaired by former GOP Sen. Connie Mack of Florida, recommended big cuts in the cherished home mortgage deduction and other popular tax breaks, Bush effectively gave it a cold shoulder.

“The best thing that these various commissions have done is to raise public consciousness about very genuine problems,” said Henry Aaron, an economist at the Brookings Institution who tracks government actions.

Bowles, who was former President Bill Clinton’s White House chief of staff, agrees and says he thinks Obama’s deficit commission has done much to help raise public consciousness over the urgency of dealing with a national debt now approaching $14 trillion.

“The American people get it now,” Bowles said.

Commission co-chairman Simpson, a former Republican senator from Wyoming, put it more colorfully when discussing Congress’ challenges taming the deficit:

“Let me tell you, this baby ain’t going away. And they may not like anything, but this one is an indigestible lump that will never go away. Whoever has to deal with it, they’ll go back and look at this plan.”

Source: The Associated Press.