In the days since President Barack Obama’s budget was released, the general perception has been that the president rejected the recommendations of his fiscal commission, which we co-chaired, and that the opportunity for serious action on the deficit has been lost.
To be sure, the president’s budget doesn’t go nearly far enough in addressing the nation’s fiscal challenges. In fact, it goes nowhere close.
But we see the cup as half-full — and think there is the real possibility that a bipartisan deficit reduction plan can make it to the president’s desk by year’s end.
The process is still in its early stages. As expected, neither side has shown all its cards. But leaders on both sides understand the magnitude of the problem and, deep down, know what must be done. The question is whether they can develop the political courage to make the tough choices before the markets make them for us.
The president’s budget takes some positive first steps toward tackling our looming deficits. It recognizes that spending is the problem — and that it must be brought under control in a way that protects the country’s most important investments.
The five-year freeze on non-security discretionary spending does not go nearly as far as the discretionary cuts we proposed, but it moves in the right direction. Obama’s budget adopts several common-sense reforms on health care and mandatory spending that make these programs more efficient and target taxpayer money where it is needed most.
In addition, the president recognizes that new revenue should come not from raising income tax rates but from cutting “tax expenditures” — the various deductions, credits and loopholes that are just spending by another name.
Sadly, the president does punt on the larger issues. On health care, his budget calls for only a handful of savings and then asks Congress to identify the rest. He falls far short of comprehensive reform needed to simplify the tax code — broaden the base, lower rates and reduce the deficit — and proposes instead a small limit on deductions for higher earners (which Congress has rejected the past two years). He proposes nothing for restoring the solvency of Social Security, simply calling for a bipartisan process.
And yet, he’s right: A bipartisan process is where this must start. In his news conference Tuesday, the president said that the fiscal commission plan represented a “framework for a conversation,” noting that “this is going to be a process in which each side, in both chambers of Congress, go back and forth and start trying to whittle their differences down until we arrive at something that has an actual chance of passage.”
The real test is whether he follows through on these good intentions. He has to provide the leadership necessary to create an environment in which it is possible to begin serious negotiations on the tough choices ahead.
Building trust and mutual respect is critical to reaching a principled compromise on real fiscal reform. To accomplish something significant, a process has to be formed that puts the right people in the room — leaders who are willing to work together constructively and who are empowered to represent the administration and both parties in Congress. That cannot happen if all involved are not confident that others are negotiating in good faith.
If our commission was a test case for divided government, then we have offered resounding proof that the parties can work together for the good of the country. Our recommendations, which would reduce the deficit by $4 trillion, garnered support from 11 of 18 members (five Democrats, five Republicans and one independent). A 60 percent majority is enough to pass almost anything in Washington.
Our commission’s plan is not ideal from either party’s perspective, and it is unrealistic to expect either side to endorse it in its entirety or as an opening bid. But if both sides are serious about achieving reform, not just scoring political points or ensuring re-election, they will realize that our plan, or something equally comprehensive, represents the type of principled compromise that is in the country’s best interests.
In the end, we are optimistic about the chances for fiscal reform and about the future of this country. The political system doesn’t always move quickly or steadily, but the magnitude of the challenges ahead will require it to act. The nation desperately needs broad, bipartisan agreement based on shared sacrifices, not politics as usual. The fiscal commission’s plan can serve as the starting point; the ending point must be something equally ambitious.
Now is the moment of truth. The era of deficit denial is over. We are counting on our nation’s leaders to rise to the challenge.
Erskine Bowles, who served as chief of staff to President Bill Clinton, and Alan Simpson, a former Republican senator from Wyoming, served as co-chairmen of the National Commission on Fiscal Responsibility and Reform.
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