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President Obama: Everything Has To Be On the Table

April 27th, 2010 . by economistmom

The President’s “National Commission on Fiscal Responsibility and Reform” got started today, and the President said all the right things–especially emphasizing that everything has to be on the table (spending cuts and tax increases), or else once again all the agreement on the theory about the importance of fiscal responsibility won’t be borne out in practice.  From the transcript:

In theory, there are few issues on which there is more vigorous bipartisan agreement than fiscal responsibility.  But in practice, this responsibility for the future is often overwhelmed by the politics of the moment.  It falls prey to special interest pressures, to the pull of local concerns, and to the reality familiar to every single American — it’s a lot easier to spend a dollar than to save one.  That’s what, at root, led to these exploding deficits.  And that is what will lead to a day of reckoning.

Tomorrow (Wednesday) I’ll attend a “fiscal summit” sponsored by the Peterson Foundation and featuring President Clinton, Obama OMB Director Peter Orszag, and National Commission co-chairs Erskine Bowles and Alan Simpson.  I’ll report on it tomorrow night and might even “tweet” from the event.  (But if Ezra Klein’s going to be there, I won’t even bother; no one can out-live-tweet Ezra.)

13 Responses to “President Obama: Everything Has To Be On the Table”

  1. comment number 1 by: Matt Franko

    EM,
    Sounds prestigious, Im going to attend this other event instead though: http://www.fiscalsustainability.org

    Resp,

  2. comment number 2 by: Brooks

    Diane,

    Forgive me for repeating most of a comment I made on another thread, but I really hope all involved bear in mind THE 3 TYPES OF OBJECTIONS THAT MUST BE OVERCOME to achieve adoption and implementation of a fiscally responsible plan

    1. Objection to major sacrifices in general.

    2. Objection to ideological compromise in the set of sacrifices, presumably with either the mistaken belief that their preferred, ideologically pure solution is both economically and politically feasible or the willingness to let the ultimate cost and risk of imbalances worsen in hopes of getting a better deal — i.e., less compromise — later, perhaps in anticipation of an ideological shift among the public, perhaps as a “game of chicken” as a crisis nears.

    The same applies to non-ideological priorities of individuals, groups and segments, i.e., not wanting to sacrifice one’s favorite programs, tax deduction, etc. Basically “tragedy of the commons”.

    3. Suspicion that if their ideological “side” accepts ideological (or economic) compromises in the set of sacrifices, the sacrifice will be wasted as “the other side” takes advantage of that contribution to get more of what it wants. The right suspects that incremental revenues will go largely/completely to incremental spending (higher spending than would have occurred without the incremental revenues) rather than to deficit-reduction, and the left suspects that sacrifices in social spending will be used largely for “more tax cuts for the rich” or at least eventual reduction/cancellation of planned tax increases.

    Again, same applies to non-ideological priorities.

    #3 actually applies to both negotiations (i.e., suspicion that one’s side’s willingness to compromise will merely be exploited by the other side) and to expectations regarding implementation (i.e., the other side’s compromises won’t actually be implemented).

    And related to the prioritization of sacrifices is another very important point: the need for real (and clearly constitutional) campaign finance reform so the public in general doesn’t suspect that they are being asked to sacrifice much more than necessary so that politicians can protect big campaign/party/PAC contributors from a “fair” level of sacrifice. I happen to think a mostly publicly-funded system for Congressional and presidential elections is a good solution (voluntary, so it’s clearly constitutional, but made so attractive — via very high matching multiple and flexible caps if confronted by a well-financed opponent who opts out — that almost all will choose to stay in the system). A good step in that direction would be the Fair Elections Now Act http://www.publicampaign.org/node/38166 and note that it was introduced by Dick Durbin, who is also on the president’s fiscal commission. Another interesting idea: http://dmarron.com/2010/03/20/should-campaign-contributions-be-anonymous/

  3. comment number 3 by: Brooks

    FYI all,

    Steny Hoyer Op-Ed in WSJ http://online.wsj.com/article/SB10001424052748704671904575194113752103610.html

  4. comment number 4 by: Brooks

    I would add that there is a FOURTH OBJECTION: belief that (1) government operations are generally inefficient, and (2) there is so much “waste/inefficiency, fraud and abuse” in government spending that much/most of the problem could be solved by addressing those problems.

    There is, IMHO, substantial validity to #1, and some significant and well-publicized initiative or expansion of existing initiative to increase efficiency would help win over the public (an initiative roughly similar in nature to Al Gore’s initiative as VP in the early/mid 90s).

    As for #2, people need to be educated on that misconception while also promising the aforementioned initiative.

  5. comment number 5 by: Brooks

    And just to support my point regarding Objections #3 and #4 and my point regarding campaign finance reform, the ViewPoint Learning (qualitative) research with which you are familiar also points to these objections and imperatives, which they include in what they conclude is the largest overall obstacle to public acceptance of sacrifices to solve the fiscal imbalance problem: lack of trust in government. From the report:

    What we found, in dialogue after dialogue across the country, is that the main obstacle to building public
    support for the difficult choices we face is not public opposition to tax increases or program cuts, nor is it public lack of interest. The main obstacle is a deeply felt and pervasive mistrust of government. Americans were clear: It’s not about taxes. It’s not about spending. It’s about trust.

    …Trust was the was the major recurring theme on each issue. Participants had an overarching precondition: they would accept no reform or tax unless they could trust that their leaders were acting in
    the public interest, and that their money was being spent responsibly and for the purposes intended. This was an assurance they felt was sorely lacking today.

    The full report: http://www.viewpointlearning.com/publications/reports/AWW_FINAL-1.pdf

  6. comment number 6 by: SteveinCH

    Just read the Hoyer Op-Ed and I was disappointed. Had the Congressman chosen to omit the Bush bashing and Obama praising, it would have been a stand up piece that, while not breaking new ground, was worth reading.

    Unfortunately, he couldn’t resist. It is indeed odd to me that this discussion about the deficit being “Bush’s fault” persists.

    Let me take the 3 things that people like to go on about (including the Congressman) to make the point.

    1. The Bush tax cuts (for the rich). Well they weren’t for the rich in practice but that’s an entirely different debate. THEY END THIS YEAR!!!!! If you want to blame past deficits or even the current deficit on Bush tax cuts, it’s fine. But aren’t we talking about the long term? Didn’t the Dems tell me that the short-term doesn’t matter on deficits? How can this be a rational argument?

    2. Medicare Part D. Yep, this is a problem. Faced with this problem the current Congress and administration decided to do what? Well, they decided to expand Medicare Part D by closing the donut hole. Sure they paid for the expansion but they could have used the same funds to close the gap. They chose not to do so. It’s rather tough in that instance to blame the other guy.

    3. The wars. Similar to number 1. If we are taking about 2010, 2011, 2012, there’s a point to this argument. But we’re not, we’re talking about 2015 and beyond. Oddly enough, we have an agreement in Iraq to get our troops out of there well before 2015 (the vast majority of them anyway). So the only potential long-term war is in Afghanistan where the current group has escalated the war and made it more costly.

    I just wish we could stop. The responsibility lies with the current decision maker for everything except the interest on the accumulated debt. The current decision maker can do anything. Arguing it’s someone else’s fault is just weak sauce.

  7. comment number 7 by: SteveinCH

    Brooks,

    Good point about trust and efficiency. The only addition I would have on efficiency is that the Gore initiative was a drop in the bucket. The type of initiative that would be necessary to improve trust and have an impact would need to be much more draconian.

    Congress would need to somehow mandate that each and every agency propose cuts totaling 15 percent (arbitrary but big number) without impacting service provision. The 15 percent would probably have to leave out the cost of direct transfers since that’s not really compressible without a change in the law and would impact service provision. Congress would then need to have an up or down vote, without amendment, on each and every agency proposal with full transparency to the public on those proposals.

    That type of effort would make a difference because it would be measurable and public. The Gore thing, which was neither large, nor measurable, nor public wouldn’t do much either financially or for trust.

  8. comment number 8 by: Brooks

    Steve,

    Re: the Gore initiative was a drop in the bucket

    I agree (IIRC), particularly in dollar terms. IIRC the big boast was the reduction in payroll (maybe also the quantity of programs eliminated). My point was largely P.R. to at least achieve adoption of some serious plan. And even after there could be some P.R. benefit from claims similar to Gore’s, albeit subject to criticism/belittling in dollar terms per your comment. Ideally, of course, substantial savings could be achieve. For example, Obama claims he’s moving to reduce the rampant Medicare fraud that some estimate at around $60 billion annually. We’ll see.

  9. comment number 9 by: SteveinCH

    I guess I believe that given today’s skepticism, the bar on PR is a little higher than it was.

  10. comment number 10 by: Brooks

    I agree that A Gore-type/level initiative wouldn’t be ideal, but I think the P.R. from some such effort would help sell a serious fiscal plan — i.e., significantly better than nothing. YMMV.

  11. comment number 11 by: VAT Brat

    Brooks,

    The National Commission should focus on creating a structure that will lead to consensus rather than trying to reach a consensus on specific cuts.

    You wrote that a major obstacle to getting a binding agreement is:

    Suspicion that if their ideological “side” accepts ideological (or economic) compromises in the set of sacrifices, the sacrifice will be wasted as “the other side” takes advantage of that contribution to get more of what it wants.

    The way to ameriolate that suspicion is to enact a Debt Limit Referendum (www.thepeoplesdebt.com )

    The commission will never get 14 votes agreeing to any deficit reduction compromise until there is a constitutional backstop to satisfy Republicans that increased taxes would just create more room for Democrats to spend.

    If Congress must submit any request to increase the level of public debt (excluding SS and Medicare Trust intragovernmental obligations) to the voters for approval, then Republicans could gain confidence that Democrats could not pull a fast one.

    Likewise, Democrats would benefit from a Debt Limit Referendum because Republicans could not propose tax rate decreases leading to lower revenues unless they accompanied such a proposal with spending cuts. Republicans haven’t had the courage to recommend spending cuts when they had majorities under Bush so it’s not likely they’ll enact them without bi-partisan support, which they could not get proposing tax cuts.

    Assuming that voters care about deficits and would balk at raising the public debt ceiling to facilitate reckless spending, then the Debt Limit Referendum traps both parties’ ideologues into a mathematical bind they cannot escape.

  12. comment number 12 by: Brooks

    Saw this piece by J.C. Watts, and, well, I’m beyond sick of seeing/hearing politicians and commentators posturing as straight-talking, disciplined, and more responsible while demonstrating the opposite.

    All I did was scan the piece looking for Watts to actually say something. That is, to actually say what sacrifices he suggests to solve the problem. As I scanned, I was thinking, “nothing, nothing, nothing yet…” and then, toward the end, Watts writes:

    Making spending cuts will require some sacrifices. Yet does anyone doubt that the federal government’s budget includes billions — even hundreds of billions — that are largely wasteful and could be eliminated?

    Real leadership is about making tough choices, and we need real leadership in Washington now more than ever. http://www.lvrj.com/opinion/getting-the-budget-under-control-92614239.html

    Wow, what leadership Watts himself shows. His message: Eliminate waste to solve the problem. In other words, his call for “leadership” and “making tough choices” and accepting sacrifices amounts to a grand total of eliminating spending that provides little or no benefit, the elimination of which, by definition, isn’t much/any sacrifice at all. All gain, no pain. Wow, thanks a pantload J.C.

  13. comment number 13 by: Josh Uy

    Nice quote on money.cnn.com!