Republicans have acknowledged that the federal government needs new revenue to avoid a fiscal calamity in the new future. True, their recently unveiled proposal to avoid the looming fiscal cliff did not include higher tax rates for anybody. In fact, it calls for lower rates. But the plan does include $800 billion in new revenue by eliminating loopholes and some deductions.
That is quite a concession from the GOP’s leaders on Capitol Hill. Not long ago, they would have stood firm against any plan to raise an additional dime in revenue. But they understand reality, and they know that last month’s elections didn’t go particularly well for their party.
Unfortunately, the White House seems incapable of putting ideology and dogma aside in the best interests of the nation. President Obama’s deficit reductions include not a dollar’s worth of cuts in Social Security, Medicare or Medicaid spending.
But, of course, the biggest item in the president’s plan is a tax hike on well-off Americans-—nearly a trillion dollars worth of tax hikes, in fact.
It’s tempting to dismiss the president’s proposal as simply not serious. And, of course, it is just the beginning of the high-stakes poker game that will occupy Washington for the next two weeks.
But still, anyone who followed this year’s presidential campaign knows that the president is quite serious in his demagogic insistence that the well-off are simply not doing their fair share. What’s more, the president has refused to confront his party’s hard-liners, who really do believe (or say they do) that Washington can balance its books without reforming federal entitlement programs.
Social Security cost Washington $762 billion in the most recent fiscal year. Medicare cost another $470 billion. These are big numbers, even by Washington’s standards. Social Security costs more than national defense. And yet some Democratic hard-liners would have you believe that the program doesn’t need to be reformed.
Republicans know (and some no doubt fear) that by conceding the point on revenues, they have created a space for possible tax hikes. If nothing else, Speaker John Boehner and his colleagues have shown an admirable degree of flexibility. You can be certain that the tea party crowd is up in arms over any plan to raise more revenue for the federal government.
The question is whether the White House can reply in kind, and whether the president has the will and the determination to defy his party’s dogmatic defenders of entitlement programs. Mr. Obama needs to remind them that in fewer than 20 years—the blink of an eye in the life of this republic—there will be 72 million Americans over the age of 65. That’s compared with about 40 million today. How in the world can Washington afford current levels of benefits for so many senior citizens?
Politicians and policymakers alike have been fretting about this other fiscal cliff for decades. Little has been done. Now is the time to get entitlement reform done. The president has to tell members of his party’s left wing that the status quo is unacceptable and unaffordable.
A deal requires pragmatism and flexibility. It’s time the White House showed more than a little of both.