Stop talking, start leading on fiscal fix
On Tuesday President Obama stood behind a podium at the Newport News Shipbuilding plant in Virginia, a massive aircraft carrier propeller loomed behind him as the backdrop for his speech, along with a sampling of hardhat-wearing workers who build the nation's carriers. The president's advance team did a wonderful job staging the event, which appeared quite dramatic on the network news coverage that night. Who knows what President Lincoln may have accomplished had he had such an image-conscious crew working for him prior to delivering the Gettysburg Address.
"This work, along with hundreds of thousands of jobs, are currently in jeopardy because of politics in Washington," roared President Obama. "These cuts are wrong. They're not smart. They are not fair. They are a self-inflicted wound that doesn't have to happen."
The cuts President Obama refers to are required by the Budget Control Act of 2011, which he signed into law. Hearing the president speak in recent weeks at campaign-style events across the country, one would think the mandate to cut $85 billion in government spending over the next seven months was imposed from some outside source. The reality is that this is a deal the president reached with Congress.
One reason President Obama made that deal, ending an impasse with the Republican-controlled House over raising the debt ceiling, is that the future cuts - then 18 months down the road - were to fall particularly heavy on military spending. The administration's calculation was that Republicans would find those cuts so distasteful, so politically unpalatable, that they would negotiate an alternative deficit-reduction deal that included higher taxes as well as spending cuts. But the Republican leadership has remained steadfast in its refusal to support any further tax revenue increases, even if it means sizeable defense spending reductions.
This is particularly bad news for southeastern Connecticut, with an economy so dependent on military spending. Absent a deal, which appears unlikely, the cuts begin Friday. The impact should not be immediate. This is not a shutdown of government as seen in past fiscal stalemates in Washington. But if the sequestration cuts continue to roll out in the weeks and months to come, the result could be serious for our region. Expect unpaid furloughs of civilian workers at the U.S. Submarine Base in Groton, reduced work and so reduced jobs at Electric Boat, cutbacks at the Connecticut National Guard and cuts in federal aid for the state, just to name a few impacts.
Conceptually, President Obama talks of the kind of approach to reducing deficit spending that most economists agree is the right one. It is the approach recommended by the deficit-reduction committee he appointed, headed by Republican Alan Simpson and Democrat Erskine Bowles. That approach involves modest cuts in the short term, while reforming the big entitlement programs - Medicare, Medicaid and Social Security - that will be unsustainable long term without adjustments to curb spending. President Obama is also right in calling on Congress to raise revenues by reforming tax policies - ending the carried interest tax rate that allows hedge fund or private equity managers to pay a measly 15 percent tax rate on their vast incomes, correcting abuses in the use of deductions, and ending tax policies that provide incentives to move jobs overseas.
The problem is that the president has not laid out a detailed proposal. Even in a second term, and no longer having to face an election, he refuses to provide details of how he would rein in entitlement spending, fearful apparently of causing damage to the Democratic Party by staking out positions that will be politically unattractive.
It is long past time for President Obama to lead on this issue. Only with his own plan in place can the president effectively call out Republicans for being unreasonable on tax policy. Using the moral authority of the presidency he can be frank with the American people that sacrifices must be made for the good of the country. Measured against that standard it would be difficult for Republicans to continue protecting the rich from tax reform.
This, we feel, would be a far more effective approach than a barnstorming tour warning of and whining about the damage of spending cuts.
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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