Mr. President, time for bold leadership
In his upcoming inaugural and State of the Union speeches, President Obama needs to set a clear vision of where he wants to take this country in terms of fiscal and tax policy. He must then codify that vision in an understandable set of legislative proposals. Finally, the president should do what he does best and take his case directly to the American people.
Failing to do that, he risks seeing the second term of his presidency turn into a repeat of the first, with more gridlock, brinksmanship and growing public disgust with Washington.
As that first term ended, President Obama achieved what most political observers would normally consider a modest victory, but which in today's Washington was a notable success. He campaigned for re-election on the premise that part of getting deficit spending under control was requiring the wealthy to contribute more in taxes. He achieved success by compromising, and instead of the $250,000 income threshold he advocated, Congress approved a rate increase on family incomes of $450,000 or more.
Yet finally getting enough Republicans to say "uncle" on a tax increase hardly addresses the nation's long-term troubling fiscal outlook. It was but a small step.
The deal did not address the spending side of the fiscal cliff, instead pushing it back two months. Without congressional action, cuts of approximately $110 billion are set to take effect in early March. Half the cuts would come in defense spending, the other half in non-defense budgets.
Discretionary spending accounts for the Defense Department would be cut by 10 percent, according to the administration. On the non-military side, discretionary accounts will be trimmed across the board by more than 8 percent, including a 2 percent cut to Medicare spending, the administration estimates. Many economists warn such a large and abrupt cut in federal spending, made haphazardly, could stall the economy.
Around the same time the nation will bump up against the debt ceiling and will not be able to meet its obligations unless Congress raises it.
Deficit hawks in the House may justifiably see themselves in a dominant position at that point, refusing to raise the debt ceiling and avoid the massive across-the-board cuts unless they get the budget reductions they want, likely hitting heavy on social service and environmental programs.
The president would be making a mistake by again engaging that faction in a game of high-stakes poker, each side bluffing and refusing to fold until the nation is up against a binding deadline and imminent crisis.
President Obama would be far better off making a bold and fair policy proposal, offering a vision that requires tough but necessary sacrifices. But what vision?
We again urge President Obama to turn to the commission he appointed - the National Commission on Fiscal Responsibility and Reform, more commonly known as the Simpson-Bowles Commission after its chairmen, former Republican Sen. Alan Simpson and the former Clinton White House chief of staff, Democrat Erskin Bowles. The key principles of its 2010 report remain sound.
Those principles include shared sacrifice; cutting the deficit by over $4 trillion over the next 10 years, sufficient to stabilize the debt by 2015 and reduce debt as a percentage of GDP below 70 percent by 2020; and achieving that goal with two-thirds spending cuts, including changes to entitlement programs, and one-third revenue increases through tax reforms.
By showing leadership and demonstrating a willingness to make the tough choices, President Obama would put tremendous pressure on both recalcitrant members of his own party and on Republicans to strike a deal and move the country forward.
This is what second term presidents can do. It is what President Obama must do.
The editorial board is composed of the publisher and four journalists of varied editing and reporting backgrounds. The board's discussions and information gained from its meetings with political, civic, and business leaders drive the institutional voice of The Day, as expressed in its editorials. The editorial department operates separately from the newsroom.
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