In his State of the Union address, President Obama moved quickly to the immediate, the next budget confrontation with congressional Republicans, the $1.2 trillion in spending cuts set to take effect on March 1. The framework of the “sequester” was such a bad idea that the expectation was lawmakers would craft and enact something better. So far, they haven’t done so, some even arguing for proceeding with the reductions.
The president seized the opportunity to reinforce the carelessness at work, the budget ax falling on key priorities such as education and research. If the defense budget must be reduced, it shouldn’t be accomplished in this almost arbitrary fashion. Medicare is a leading driver of the country’s long-term fiscal challenge, yet it has been excluded from the sequester.
What is the responsible alternative? The president returned to the concept of a balanced approach, combining spending reductions and revenue increases, steering clear of applying steps too soon and jeopardizing the recovery. The president even identified further ways to slow Medicare spending, including expanded means-testing for higher-income seniors and applying Medicaid drug rebates to Medicare. He pointed to tax reform as a tool for generating revenues, such as requiring hedge fund operators and investment types to treat their fees as ordinary income and not as capital gains taxed at a much lower rate.
There is no need for repeating a game of chicken. The president declared the state of the union “stronger.” Yet the crisis the country now faces isn’t about deficits and debt. It involves a weak recovery failing to produce a sufficient number of jobs. If anything, the country should be spending more, for example, taking advantage of low interest rates to improve and maintain public works or boosting energy research, as recommended by Bill Gates and other business leaders.
What the president rightly argued is that the country should be thinking more ambitiously about spurring growth and confronting pressing problems. The economy would benefit from launching additional advanced manufacturing hubs, such as the one in Youngstown around 3-D printing, involving the University of Akron. Sen. Sherrod Brown renewed the legislative effort this week. Few investments promise a greater return than bringing early education to more children.
What are the prospects of advancing on these fronts and others, including an increase in the minimum wage to $9 an hour? Beyond a deal on immigration reform and perhaps a bill aimed at gun violence, probably slight in polarized Washington. Yet there is much civic value in laying out ambitions for the country, in asserting the need for taking the lead on climate change. Now the president must apply the political skills and leverage he has to expand the concept of what is possible.
