President Obama has jumped into the debate over long-term fiscal responsibility with a plan that differs sharply from the one unveiled earlier this month by Rep. Paul Ryan (R-WI), chairman of the House Budget Committee. In a welcome move, Obama last week also called for high-level, bipartisan negotiations aimed at developing a concrete plan to stabilize the debt-to-GDP ratio by the end of June.
Obama is pushing for his new plan outside of Washington, including Chicago, San Francisco and Los Angeles, but he is unfortunately doing so in campaign-style events that will stoke partisan emotions. The plan would eliminate many tax breaks, cuts hundreds of billions of dollars in both domestic and defense spending in the coming decade, allow the Bush tax cuts for high-income people to expire, and try to curb the growth in Medicare and Medicaid spending.
Last week the House approved Ryan’s plan – which also promises even more deficit reduction while revamping Medicare and Medicaid -- without a single Democratic vote and with no chance of Senate approval.
Now that both parties have laid down their policy markers, it would be helpful if the President could use his appearances around the country to explain the dimensions of the fiscal challenges and lay the groundwork for the bipartisan cooperation that will be essential to reaching solutions.
On Monday Standard & Poor’s provided a reminder of the need for such solutions when it lowered its outlook for the credit rating of the United States from “stable” to “negative.” This raises the possibility that the country could eventually lose its top AAA rating. An S&P analyst noted that U.S. policymakers continue to disagree “on how to reverse recent fiscal deterioration or address longer-term fiscal pressures.”