Why Obama Punted on Deficit Reduction

The latest Republican talking point is that President Obama is “punting” on his fiscal responsibilities by not proposing deep cuts in Medicare and Social Security. It is true that Obama’s 2012 budget was exceedingly timid when it came to deficit reduction. But Obama’s GOP critics ooze hypocrisy when they accuse him of fiscal irresponsibility.

This, after all, is the party that just last year, in its zeal to defeat “Obamacare,” demonized as “death panels” the president’s modest effort to constrain future cost growth in Medicare. And it is the party that continues to demand the 2001 and 2003 tax cuts be made permanent for all.  

As usual, Republican message discipline is impressive: “We got a punt,” said House Budget Chairman Paul Ryan (R-WI) of the Obama fiscal plan. “When it comes to the real issues facing our country, he just punted,” said House Speaker John Boehner. “Obama Punts the Debt to the GOP” read a headline in the GOP mouthpiece The Weekly Standard. And so on.

The Republican death panel argument has taken on a curious double-meaning. Initially, it was their criticism of a provision in the 2010 health law that allowed Medicare to pay doctors for end-of-life discussions. Then, it morphed into the GOP’s objection to an independent board created to recommend Medicare cost savings to Congress.    

The combined messages were  a huge political winner for the GOP in 2010. In the non-presidential election year of 2006, voters 65 and older split evenly between Republican and Democratic congressional candidates. In off-year of 2010, GOP candidates won this group by 21 percentage points. The major reason according to pollsters: seniors’ fear of Medicare cuts under Obamacare, a worry aroused by the same GOP leaders who now criticize the president for not proposing Medicare cuts.  

Obama is no fool. In the wake of 2010 election debacle, it is absurd to expect him or congressional Democrats to stick out their necks again on Medicare—to say nothing of Social Security. By choosing to trash the health law’s Medicare constraints for short-term political gain, Republicans dealt a serious blow to deficit reduction efforts.

How steep a hill must those who want to trim Medicare climb? According to a recent poll by the Kaiser Family Foundation, nearly half of those surveyed oppose any reductions to the program, which accounts for one-sixth of all government spending.

Obama may have a bit more room to maneuver on taxes, but not much. Polls suggest Americans support tax increases on high-earners to reduce the deficit. But the public opposes other new revenues. And last December, of course, Obama seemed unwilling to engage on the tax issue at all. The president, who vows to never raise taxes on individuals making less than $200,000 (or couples making less than $250,000) agreed with the GOP to extend the Bush-era tax cuts for all for two more years.

The GOP leadership, boxed in by its own “no new taxes” pledges and pressure from the tea party, shows no sign of budging on revenues. Obama has boxed himself in on taxes. And why would any but the most naive Democrat unilaterally propose unpopular Medicare cuts without so much as a hint of GOP movement on revenues?

Thus, Obama and the GOP do budget battle on the exceedingly narrow ground of non-security domestic spending—roughly 12 percent of government. In this environment, small-government, anti-regulatory Republicans get what they want: big cuts in highly visible (though relatively small) programs. And Hill Democrats get what they want—the opportunity to rip the GOP for allegedly increasing the suffering of those in need.  

A small bipartisan group of senators is struggling mightily, with quiet White House backing, to find a way out of this maze. But given recent political history, it is hard to see how they’ll succeed.