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Obama Deficit Speech: Lots of Flowery Talk About a Major Distraction

It was a classic Obama speech – reasonable, and seductive to a degree that one might forget that we're debating how fast we're going to put the brakes on this recovery.
 
 
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Barack Obama's deficit address was a classic piece of Washington Kabuki. Long on rhetoric but sparse in detail, it was replete with impossible-to-fulfill promises while kicking the stickiest issues down the road, perhaps until some period of idealized comity arises in the future.

Obama pledged to cut $4 trillion from the projected deficit over the next 12 years. “To meet our fiscal challenge, we will need to make reforms,” he said. “We will all need to make sacrifices.” Which means $3 dollars in spending cuts (and “interest savings”) for every dollar raised by cutting coporate tax loopholes and restoring the Clinton-era rates on the wealthiest Americans.

Obama again crowed about the “historic cuts” the White House negotiated with Congressional leaders last week, saying, “The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week.” The speech was designed to take Paul Ryan's ruinous budget out and beat it to death while claiming to be serious about deficit reduction. It did that.

Obama also trumpeted bipartisanship, recalling the sunny days when Tip O'Neill and Ronald Reagan would duke it out and then share a beer. “This sense of responsibility... isn’t a partisan feeling,” he said. “It isn’t a Democratic or Republican idea.”

If the budget projections don't look better by the end of 2014 – with debt stabilized and declining by the end of the decade – it would automatically trigger deep, “across-the-board” spending cuts. When a White House official was asked how this would actually work prior to the speech, he responded that the details are yet to be worked out.

In his address, Obama said we have to “put everything on the table.” But when asked whether a carbon tax would be part of the mix in closing the deficit during the White House press call, the official said it was not. When asked why Obama was calling for more modest defense cuts than many analysts say is necessary, he replied that, as Commander-in-Chief, Obama had to be more cautious. Despite the doubling of defense spending since 9/11, Obama promised only to hold future increases to some figure beneath the rate of inflation.

“Winning the future” is definitely on the table, as is some vaguely articulated fiddling with Medicare, Medicaid and Social Security. Promising not to balance the budget on the backs of the neediest, the president pledged to control drug costs without imposing a burden on seniors or the poor, but it's unclear how that might happen.

He vowed to control the growth of Medicare spending by holding down costs to a half of a percent above inflation beginning in 2018. How that will happen is also an open question, but health-care costs are projected to grow much more rapidly than the rate of inflation.

Ultimately, the speech was a catastrophe for progressives who argue that we need to grow our way out of the deficit by addressing the economic crisis pummeling “Main Street.” "The greatest long-term threat to America’s national security is America’s debt," he said. But there was little in the way of concrete substance.

How will we achieve $4 trillion in deficit reduction “without hurting the most vulnerable”? The president called for a “gang of 16” legislators, led by vice president Joe Biden, to enter into negotiations designed to figure it out. How will he contain health-care costs? By strengthening the Independent Payment Advisory Board that was created by the Affordable Care Act. What about cutting discretionary spending? Obama wants to implement the recommendations made by the co-chairs of the Simpson-Bowles commission. They called for restoring discretionary spending to 2008 levels, but there is nothing that binds future Congresses to those limits – it's called “discretionary” spending because it's determined during the annual budget process.

 
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