Finding a solution to America's deficit and budget impasse will take compromise on all sides. Neither tax increases nor budget cuts alone can solve the nation's fiscal problems. President Barack Obama will send a budget to Congress today that takes a balanced approach and is a promising template for a final deal. Partisans on both sides have something not to like in the plan, but compromise is the only way forward. House Republicans, in particular, need to look again lest Congress send another sign that this nation is not serious about confronting its fiscal challenges.
Under the plan, Obama bucks his own party and takes a big step toward meeting Republican demands on entitlement cuts to Medicare and Social Security. In exchange, he's proposing higher taxes on the wealthiest Americans. The president would cut about $400 billion from health care programs and $200 billion from domestic areas. The cutbacks to health care would be targeted largely to providers and pharmaceutical companies, though the president's plan does increase Medicare coverage costs for higher-income beneficiaries.
On Social Security and veterans benefits, Obama would adopt the chained consumer price index as the new inflation formula with some protections for low-income and very old beneficiaries. The formula reduces cost-of-living increases by assuming that consumers adjust for higher prices by substituting cheaper alternatives. There's a reasonable debate on whether that's the best approach, but congressional Democrats need to join their president in acknowledging that entitlement reform has to be part of the equation.
On the revenue side, Obama would bring in an additional $600 billion over 10 years primarily by putting limits on deductions for those in higher tax brackets. That's a good starting point.
Counting the $2.5 trillion in deficit reductions that Obama and congressional Republicans have agreed to since 2010, the president's budget would trim the nation's balance sheets by $4.3 trillion over 10 years. By 2023, that would drop the deficit to 1.7 percent of the nation's economy, down from 5.5 percent in the current budget year. And the budget would replace the arbitrary, automatic cuts under sequestration with a responsible path for reforming spending and investing in priorities.
Yet the response from congressional Republicans, so far, has been disappointing as they remain opposed to closing tax breaks. The Republican House speaker, John Boehner, is rejecting the president's budget sight unseen. Such brinksmanship is more of the same and risks doing even more economic harm.
Obama began his second term trying to breach Washington's fierce partisanship with a personal touch. Tonight he will dine (again) with another group of Senate Republicans in a charm offensive. Members of both parties have a responsibility to come to the table prepared to compromise. The alternative just isn't working.