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Opinion

Opinion

Opinion: Obama budget not a breakthrough

April 12, 2013

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— Well, at least we’re starting to get the procedure right. Washington has rediscovered the beauty of the boring. It’s called “regular order,” using the normal, routine, constitutional process to arrive at, for example, a budget.

Normal had disappeared during the Obama years. Republicans duly submitted annual budgets, which the president then used for target practice, most famously demagoguing Paul Ryan’s 2011 budget as un-American. Meanwhile, the Democratic-controlled Senate simply stopped producing budgets for four years. And the ones the White House put out were so preposterous that, for example, the 2011 version was rejected by the Senate 97-0.

What little progress that was made came by way of crisis backroom deals orchestrated by Gangs of This or That. One gave us a sequester that everyone purports to deplore. Another gave us the naked tax hike of the “fiscal cliff.” And none produced a written record of actual, written offers that could serve as the basis for serious, open negotiations.

Ad hoc, person-to-person negotiations generally require a high level of trust. The great virtue of regular order is that procedure can substitute for trust. And now we see its first fruit: Each side has finally had to show its cards.

Now the bad news. The cards laid down by the White House are quite unimpressive. The 2014 budget is tax-and-spend as usual. The actual deficit reduction over a decade is a minuscule $0.6 trillion — out of a total spending of $46.5 trillion. And every penny of this tiny reduction comes from tax hikes. Nothing from spending cuts, which all end up getting spent elsewhere.

Moreover, where’s the compromise? The Obama budget calls for not only more spending than the GOP’s, but more than the Democratic Senate’s as well. For just FY 2014, it even contains $160 billion more spending, and $128 billion more deficit, than if the budget — that Obama purports to be cutting — were left untouched!

True, President Obama has finally put on the table, in writing, an entitlement reform. This is good. But the spin, mindlessly echoed in the mainstream media, that this is some cosmic breakthrough is comical.

First, the proposal — “chained CPI,” a change in the way inflation is measured — is very small. It reduces Social Security by a quarter of a penny on the dollar — a $2,000 check reduced by a $5 bill.

Second, the change is merely technical. The White House itself admits that the result is simply a more accurate measure of inflation. It’s not really cutting anything. It merely eliminates an unintended overpayment.

Finally, the president made it clear that he doesn’t like this reform at all. It’s merely a gift to Republicans. This is odd. Why should a technical correction be a political favor to anyone? Is getting things right not a favor to the nation?

What the budget is crying out for is some entitlement reform that goes beyond the bare-minimum CPI revision that just about every deficit commission of the last 15 years has recommended as an obvious gimme. The other obvious reform is to raise the retirement/eligibility age for Social Security and Medicare to match longevity. These programs were meant to protect the elderly from destitution, not to subsidize almost one-third the adult life of every baby boomer.

Given the president’s distaste for even chained CPI, it’s hard to see him ever agreeing to a major reform on the retirement age. Nonetheless, the proposition deserves testing — through a major GOP concession on revenue.

By way of tax reform. The landmark 1986 Reagan-Tip O’Neill tax reform was revenue neutral. It closed tax loopholes and devoted the money to reduce tax rates. As I suggested last month, the GOP should offer Obama a major concession: a 50 percent solution in which only half the loophole money goes to reduce tax rates. The rest goes to the Treasury, to be spent or saved as Congress decides.

This seems to me the only plausible route to a grand compromise that restores the budget to fiscal health. Its chances are remote. But they are mildly improved by a return to a regular order in which these kinds of compromises could be worked out over time, in debate, in committee, in Congress.

Can the Democrats, now gagging on just chained CPI, agree to a major entitlement reform like an adjusted retirement age? And are there enough Republicans who, for their part, are prepared to offer a 50-50 split of loophole revenues?

Game on. By regular order.

— Charles Krauthammer is a columnist for Washington Post Writers Group.

Comments

uncleandyt 1 year, 8 months ago

Raise benefits. Lower the age of eligibility. Corporate taxes are historically low. One or two percent of trillions could add up fast. Swindles are historically high. But try not to think about that. The script says that we should get money from the poor people. More poor equals more money?right? This could work! If only there was some way of getting the word out. The Globetrotters are favored to win...again. The "game" is rigged. Charles is a paid member of the pep club.

Richard Heckler 1 year, 8 months ago

Instead of concentrating on taking money from the poor and giving more to the wealthy perhaps government should be concentrating of creating employment. After all republican administrations do play a major role in killing employment.

Killing employment is dumb IF there is no STAT plan for new employment. There is an old rule of thumb that says killing employment is detrimental to creating new employment and will not create new economic growth.

The opponents of Social Security will stop at nothing in their long crusade to destroy the most efficient retirement system in the world. Opponents have taken two tracks to attack Social Security.

The first is to claim the system as it is will fail, and the second is to claim that privatization is a better way to provide for retirement security. The first claim was the favorite from 1935 to about 2001.Then the privatization claim became the vogue. Now the first is back on the table.

With corporations routinely defaulting on their pension promises, more and more workers must rely on their individual wealth to make up the difference. The stock market collapse at the turn of the millennium wiped out much of the financial wealth of middle class Americans, and the collapse of the housing bubble has wiped out much of their remaining wealth.

Making any cuts to Social Security now, either by raising the retirement age or cutting benefits, would have a huge impact on their remaining retirement income and are not necessary to “save the system.”

Richard Heckler 1 year, 8 months ago

There is at least 22 years of Social Security benefits in the bank as we speak. The crisis is fiction. The same fiction that's been around for too many years.

What's not fiction is the lack of employment yet Uncle Sam has not been focused on that since 2001. BUSHCO real estate philosophy killed our economy which of course took jobs out of the by the millions exactly like what leveraged buyouts do. Isn't odd GW Bush learned nothing from the Reagan/Bush fraudulent home loan escapade?

Supply Side Economics,Deregulation, Laissez Faire Gov't and Leveraged buyouts suck in a big way.

People say government does not create jobs but why does government play a role in killing jobs? Without those trillions of tax dollars feeding the economy in many desirable ways the stock market would at zero and the medical insurance industry would be broke and First Management apparently would not be able to make a profit on their endeavors.

Turning Social Security Insurance over to Wall Street would create billions upon billions of annual new debt for at least 20 consecutive years. Not only that it could definitely further damage our already at risk economy.

Richard Heckler 1 year, 8 months ago

Events that happened 30 years ago are still taking place. Rt Wing GOP does not give up it's platform of fraud for it has been good to a very few of them..... where did those trillions of $$$$$$ go?

It's time to bring this back to life in an effort to rehab a taxpayer owned resource instead of pretending this project never needs maintenance. Federal Highways are not throw away road systems. After 60 years the interstate needs maintenance plus a dedicated fund to maintain the system as we go.

Federal-Aid Highway Act of 1956: Creating the Interstate System

Proposal for an Interregional Highway System Design and Standards Republican President Dwight D. Eisenhower The Clay Committee The Republican Federal-Aid Highway Act of 1956

By the late 1930s, the pressure for construction of transcontinental superhighways was building. It even reached the White House, where President Franklin D. Roosevelt repeatedly expressed interest in construction of a network of toll superhighways as a way of providing more jobs for people out of work.

Congress, too, decided to explore the concept. The Federal-Aid Highway Act of 1938 directed the chief of the Bureau of Public Roads (BPR) to study the feasibility of a six route toll network. The resultant two-part report, Toll Roads and Free Roads, was based on the statewide highway planning surveys and analysis.

http://nationalatlas.gov/articles/transportation/a_highway.html

tomatogrower 1 year, 8 months ago

Obama budget not a breakthrough

We could have the breakthrough that we have in Kansas. It's called make the poor people pay, give the rich more money, so they can hire more maids. Then watch the state break. What a breakthrough!

jafs 1 year, 8 months ago

While I agree that SS/Medicare are unsustainable in their current form, and that needs to be addressed, chained CPI is a very bad idea for seniors.

The idea behind it is that people generally buy cheaper products when the prices go up, and so their costs of living don't increase as much as the increase in a basket of the same goods from year to year. This has some validity, but not so much when applied to seniors on SS. For one thing, they're probably already buying cheaper goods, since they're on fixed incomes (and pretty low ones, for many seniors). For another, health care costs, which have risen faster than inflation, aren't considered at all in the SS COLA payments. So their costs are already rising faster than their COLA payments.

Why not simply stop providing SS and Medicare to those that don't need it? Millionaires who can easily support themselves in retirement don't need these programs.

A final reason that chained CPI doesn't make sense for COLA increases is that it doesn't save much money at all for the government, as even CK acknowledges, so it's not a good deficit reduction mechanism.

If we wanted to accurately measure the increases in costs of living, we'd have to include things like the cost of health care (and that's true for everybody).

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