What would a “grand bargain” look like? On Wednesday, President Obama unveiled a credible outline with his $3.77 trillion budget plan. Republicans in Congress long have complained about the president failing to state concretely the reductions in large social programs that he would accept. Well, there they are for all to read, three leading ideas, a tighter inflation factor for Social Security, lowering the prices Medicare pays for drugs and requiring more affluent seniors to pay higher Medicare premiums.
The president rightly has argued that any further effort to put the country’s finances in order should include a mix of spending cuts and tax increases. His leading idea for raising new revenue would limit at 28 percent the value of tax deductions. The idea tracks along the line of limiting deductions to a set amount, Mitt Romney pitching such an approach during the presidential campaign. Only the president’s concept is better. It retains sufficient incentive for charitable giving.
John Boehner might have applauded loudly. The House speaker would get the reduction in social spending that he wants (when he and his Republican colleagues aren’t cudgeling the president for cutting Medicare). The overall package of deficit reduction, started two years ago, still would contain more spending cuts than tax increases.
Yet Boehner grumbled. He lamented that the president didn’t propose bringing the budget into balance down the road, Republicans with a plan to do so in a decade. The criticism is hollow. As Alice Rivlin, a veteran of budget battles and part of bipartisan commissions on deficit reduction, noted, “There’s nothing magic about exact balance.”
The aim must be to set the deficit on a responsible downward path, the economy growing faster than the debt. The president’s budget heads in such a direction, stabilizing the debt, the annual deficit shrinking from 4.4 percent of the overall economy to 1.7 percent by the end of the decade. Already, the deficit has declined from $1.4 trillion in 2009 to a projected $744 billion next year.
At one point, Speaker Boehner suggested the two sides just move forward in the areas where they agree — the reductions in social spending. Put aside how much more loudly the president’s allies would yelp. Insisting on getting your way without giving something in return hardly reflects the reality of compromise, if governing is the goal in an era of sharp differences.
That is the value in the president’s proposed budget, providing the shape of an actual deal, calling the bluff of his adversaries. More, the president has found room to address key priorities, not moving so fast as to jeopardize the recovery, finding additional resources for early education, research and public works. Will there ever be a “grand bargain”? The president now has provided an outline deserving of a credible Republican response.