Entitlements The Only Real Cliff By Ivan Kenneally

An uninformed observer of the ongoing fiscal cliff debates would form the impression that President Obama is negotiating from a position of strength: he must have just won the last election by a resounding landslide, be presiding over a vibrant economy for which he is generally considered responsible, adored by a citizenry awash in prosperity and the hopefulness an embarrassment of riches tends to produce.

In that bizarro American cosmos, it would make sense that Obama enjoys the powerful leverage he now wields over the GOP. But in this world, one plagued by a wheezing economy and haunted by widespread discontent, he should be a chastened supplicant, quick to appease the American people with a committed spirit of compromise and reform.

So by what strange political alchemy has Obama managed to strangle the GOP into a series of cowed concessions regarding the approaching fiscal cliff? By the same rhetorical sleight of hand he won the election: redefining the debate in the terms of class warfare, depicting Republicans as shills for the rich, contemptuous of a financially squeezed middle class.

But let us consult the facts: Obama’s insistence on raising taxes on the top two percent of earners would barely produce enough revenue to keep the government afloat for nine days. And confronted by an abyss of debt-16 trillion reasons for fiscal alarm-Obama suggests we pile on more, proposing to add $1.6 trillion in new taxes. Faced with the arrant failure of his successive economic stimulus programs, he demands that we add another $50 billion to the ledger. Paralyzed by anemic growth, Obama intends to raise the top marginal tax rates for over 400,000 American families, most of them investors, small business owners, or both. To add some comedy to our mounting fiscal tragedy, despite his breathlessly prodigal spending habits, Obama is now demanding that he be permitted to increase the budget deficit ceiling without congressional approval, the equivalent of handing a blank check to a compulsive shopper. It is not clear to anyone capable of grade school arithmetic precisely how any of this is supposed to reduce the deficit.

True to politically derelict form, the GOP has ceded the argumentative grounds, allowing Obama to frame the dispute in terms of raising taxes on the middle class, something no one on either side proposes to do. Instead of all the hand wringing over the fiscal cliff, the GOP should focus the public’s attention on the real crisis: the colossal costs of our ever swelling entitlement spending.

According to the non-partisan Congressional Budget Office, nearly all of the projected increases in the budget deficit over the next three generations will be a function of ballooning mandatory spending: Social Security, Medicare, and Medicaid are the primary culprits. Consider this for context: all the revenue Obama will raise by allowing the Bush era tax cuts on the “wealthy” to expire amounts to less than 1/27 of the increase in costs of our entitlement commitments. And yet, Obama has insisted on taking these off the table, resisting even the barest hint of serious reform. This is especially strange since Obama seems aware of the problem; in January 2010 he diagnosed our real challenge astutely: “The major driver of our long-term liabilities . . . is Medicare and Medicaid and our health-care spending. Nothing [else] comes close.”

Republicans need to shift the parameters of the discussion to what is both the most urgent issue and Obama’s achilles heel: the comprehensive structural reform our economy demands. This means they need to make a public case for rehabilitating our incomprehensible tax system and our growth-killing, job destroying fiscal obligations. In comparison to the real cliff that is entitlement spending, the short-term debt ceiling is a bump in the road, a gently sloping wheel chair ramp. In this world, the one where tomorrow’s new demographic reality demands today’s responsible leadership, Republicans are holding all the good cards.

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