With pressure rising on Capitol Hill to slash spending, President Obama put forward a more sweeping deficit-reduction plan Wednesday than he'd outlined in his fiscal 2012 budget proposal just two months ago. But rather than matching the House Republicans' spending-cut ante, Obama challenged them to a different contest: dueling visions of government.
In particular, Obama accused the GOP of using the burgeoning national debt as an excuse to shift burdens from rich to poor and middle-income Americans. The version he presented of the House plan was excessively harsh, but Obama rightly criticized the GOP for trying to solve the deficit problem through spending cuts alone and foresaking critical investments in competitiveness. His plan also offered more concrete steps than the GOP did for slowing the growth in healthcare costs that threaten to hobble the economy.
The administration had largely punted on deficit reduction in its February budget proposal, taking no position on how to rein in the growth of such big-ticket items as Medicare and Social Security. The wait-and-see approach only made it seem as if Obama wasn't serious about the problem, and that impression was reinforced when House Budget Committee Chairman Paul Ryan (R-Wis.) sought to cut the deficit by $6 trillion over 10 years in his proposal for 2012. Notably, Ryan sought fundamental changes in Medicare and Medicaid that would save the federal government trillions of dollars over the long run.
The White House released the outlines Wednesday of an alternative plan that aims for a lower target — $4 trillion in savings over 12 years, half through spending cuts and half through tax increases and reduced interest payments on the federal debt. In a speech at George Washington University, Obama explained that his plan wasn't just a different way to cut costs, but a competing idea about the role of government — one that continues to provide all Americans "some basic measure of security" and to make investments in education, clean energy and infrastructure, while requiring the wealthy to bear the biggest share of the cost.
It's true that Washington wouldn't be in nearly as deep a hole as it is today had Congress not cut taxes sharply — with the largest benefits flowing to high-income Americans — during the George W. Bush administration, or if it hadn't extended the cuts with Obama's blessing last year. Obama's most effective critique Wednesday focused on Ryan's proposal to cut tax rates further, albeit while eliminating some breaks and loopholes. The result, Obama said, would be to extend the Bush-era tax-cut windfall for the wealthiest Americans while raising healthcare costs sharply for the poor and the elderly.
While the GOP budget would shift rising healthcare costs onto state Medicaid programs and the elderly in Medicare, Obama's plan would take more aggressive steps to improve the quality of care, reduce prescription drug costs and attack the misplaced incentives that drive up spending in the two programs. These changes strike at the roots of the cost problem, rather than counting on seniors and low-income Americans to force major changes in the system with their limited budgets. Obama's approach may not do enough to hold down costs, but Washington should attack the forces driving up healthcare costs before rewriting the compact between Washington and the people.