With the submission of President Obama’s deficit reduction plan, all major players are on board for what could be an enriching debate focused not only on deficit reduction but, more importantly, on creating an expectation for America and particularly for our children. This involves deciding as a people our own quality of life and our role in global affairs. Such a magnificent opportunity should not be blown away by ignorant and self-serving partisan rhetoric. The real test is not the deficit but the broader issue of civil discourse and governance.
As an electorate, we have choices. There are four major deficit reduction plans emanating from the Republicans, the President, the Bowles-Simpson Report, and the team of former GOP Senator Pete Domenici and Clinton Budget Director Alice Rivlin. In addition, GOP Senator Tom Coburn of Oklahoma is working with a bi-partisan “gang of six” on producing another entry. All plans have some genuine merit and give us an opportunity to piecemeal together a superb approach that not only reduces the deficit to manageable levels but also permits more investment in our transportation infrastructure and our young people via a real focus on educational excellence and opportunity for economic growth. It must be about tomorrow.
In a sense, the budgetary dilemma is simple: we are taking in some 18 percent of GDP in revenue and spending at a 24 percent rate. The gap is the deficit and is currently being covered by heavy borrowing from investors both here and abroad. Right now, foreign investors hold some $4.3 trillion of US treasuries. We currently pay $413 billion per year in interest costs but the kicker is that within 10 years that figure will rise to approximately a trillion dollars – thereby crowding out other vital expenditures ranging from education to defense.
However with Standard & Poor’s warning and changing our government’s credit rating from “stable” to “negative”, time is no longer an ally and will likely compel some key decisions by July as part of the debt ceiling debate.
If there is a missing ingredient, it is not on the program side but rather in the area of leadership. I would contend the President’s opportunity to take the political initiative was lost when he largely ignored the report of his own bi-partisan commission on Fiscal Responsibility and Reform (Bowles-Simpson Report) and gave the lead role to the GOP. The President should fully accept this and now decide to fully commit himself to providing broad Presidential leadership encouraging participants to sharpen their proposals and then laying down solid visionary goals that compel all approaches to deal with specific ideas relative to economic growth and excellences in global competition.
What the debate needs is not an Obama proposal but rather an Obama vision with the leadership skills necessary to piece together the best from all proposals.
Realistically, his proposal is the weakest entry and has all the characteristics of a hasty effort. It should be withdrawn. Clearly, the two most solid approaches emanate from Domenici-Rivlin and Bowles-Simpson. They appear to be well researched and reflect quality bi-partisan thought. I also suspect that the “gang of six” will come up with a very workable plan.
After the election debacle of 2010 and the health care debate, I doubt that many Congressional Democrats will fall on their swords for the President’s late entry. But what everyone would appreciate is Presidential leadership that guides the debate to a quality conclusion.
If I may, let me be blunt. If the President is seen as a partisan combatant, the food fight will continue and we, the people, will truly suffer with higher interest rates and a declining economy. Hence, we need a President that will lead all America.
Toward this end, it is imperative that he form a bi-partisan team to formulate an agreement. This means real input from all sides, a non-partisan tonality, and shared ownership.
Nothing less will stabilize the financial ship of state.