The Obama Budget and the Appearance of Reform
By Charles Krauthammer
WashingtonPost.com
Well, at least we’re starting to get the procedure right. Washington has rediscovered the beauty of the boring. It’s called “regular order,” using the normal, routine, constitutional process to arrive at, for example, a budget.
Normal had disappeared during the Obama years. Republicans duly submitted annual budgets, which the president then used for target practice, most famously demagoguing Paul Ryan’s 2011 budget as un-American. Meanwhile, the Democratic-controlled Senate simply stopped producing budgets for four years. And the ones the White House put out were so preposterous that, for example, the 2011 version was rejected by the Senate 97 to 0.
What little progress that was made came by way of crisis backroom deals orchestrated by Gangs of This or That. One gave us a sequester that everyone purports to deplore. Another gave us the naked tax hike of the “fiscal cliff.” And none produced a written record of actual, written offers that could serve as the basis for serious, open negotiations.
Ad hoc, person-to-person negotiations generally require a high level of trust. The great virtue of regular order is that procedure can substitute for trust. And now we see its first fruit: Each side has finally had to show its cards.
Now the bad news. The cards laid down by the White House are quite unimpressive. The 2014 budget is tax-and-spend as usual. The actual deficit reduction over a decade is a minuscule $0.6 trillion — out of a total spending of $46.5 trillion. And every penny of this tiny reduction comes from tax hikes. Nothing from spending cuts, which all end up getting spent elsewhere.
Moreover, where’s the compromise? The Obama budget calls for not only more spending than the GOP’s, but more than the Democratic Senate’s as well. For just fiscal 2014, it even contains $160 billion more spending, and $128 billion more deficit, than if the budget — that Obama purports to be cutting — were left untouched!
True, President Obama has finally put on the table, in writing, an entitlement reform. This is good. But the spin, mindlessly echoed in the mainstream media, that this is some cosmic breakthrough is comical.
First, the proposal — “chained CPI,” a change in the way inflation is measured — is very small. It reduces Social Security by a quarter of a penny on the dollar — a $2,000 check reduced by a five-dollar bill.
Second, the change is merely technical. The White House itself admits that the result is simply a more accurate measure of inflation. It’s not really cutting anything. It merely eliminates an unintended overpayment.
Finally, the president made it clear that he doesn’t like this reform at all. It’s merely a gift to Republicans. This is odd. Why should a technical correction be a political favor to anyone? Is getting things right not a favor to the nation?
What the budget is crying out for is some entitlement reform that goes beyond the bare-minimum CPI revision that just about every deficit commission of the last 15 years has recommended as an obvious gimme. The other obvious reform is to raise the retirement/eligibility age for Social Security and Medicare to match longevity. These programs were meant to protect the elderly from destitution, not to subsidize almost one-third the adult life of every baby boomer.
Given the president’s distaste for even chained CPI, it’s hard to see him ever agreeing to a major reform on the retirement age. Nonetheless, the proposition deserves testing — through a major GOP concession on revenue.
By way of tax reform. The landmark 1986 Reagan-Tip O’Neill tax reform was revenue neutral. It closed tax loopholes and devoted the money to reduce tax rates. As I suggested last month, the GOP should offer Obama a major concession: a 50 percent solution in which only half the loophole money goes to reduce tax rates. The rest goes to the Treasury, to be spent or saved as Congress decides.
This seems to me the only plausible route to a grand compromise that restores the budget to fiscal health. Its chances are remote. But they are mildly improved by a return to a regular order in which these kinds of compromises could be worked out over time, in debate, in committee, in Congress.
Can the Democrats, now gagging on just chained CPI, agree to a major entitlement reform like an adjusted retirement age? And are there enough Republicans who, for their part, are prepared to offer a 50-50 split of loophole revenues?
Game on. By regular order.