To believe our so-called leaders in the White House and Congress, we must choose between taming the U.S. debt and creating jobs: Text "GOP" for balanced budgets, or "Obama" for spending on infrastructure and education. Don't believe them. It's a false choice—a cop-out.
There is a third option. Somewhere between the president's hypocritical dismissal of the debt crisis and the Republicans' slavish obsession with tax cuts lies vast room for compromise that would promote both economic recovery and fiscal sanity.
President Obama on Monday unveiled a proposed $4 trillion budget that includes a six-year $478 billion public-works program for upgrading the nation's roads, railroads, ports, and other infrastructure.
He would impose a onetime 14 percent tax on about $2 trillion in foreign profits kept overseas by corporations. There would be tax hikes for the rich, tax credits for the middle-class, and free community college.
"My job is to present the right ideas," Obama told NBC News in a pre-Super Bowl interview. His smug subcontext: I've got all the answers.
Republicans controlling Congress will reflexively reject Obama's proposal and finish work on a plan that would eliminate deficits entirely over the next 10 years. The GOP would take aim at Social Security and federal health programs, the biggest drivers of mounting debt.
"What I think the president is trying to do here is to, again, exploit envy economics," said House Ways and Means Committee Chairman Paul Ryan. His smug subcontext: No, I've got all the answers.
The truth is that both sides are circling serious and solvable problems. While the annual deficit has shrunk to $468 billion this year, the Congressional Budget Office projects that debt held by the public has more than doubled since 2007 to a level higher than in any year since 1950. By 2025, the debt is projected to be nearly 79 percent of gross domestic product.
That means more money devoted to interest payments, higher rates for private-sector borrowing, and less flexibility to recover from the next financial crisis. (The debt amounted to just 43 percent of GDP at the start of the 2008 collapse.)
"The administration, Congress, and the country should be talking about the hard choices necessary to deal with this problem," writes Washington Post columnist Ruth Marcus. "Instead, we see calculated indifference and political grandstanding, including by a president who should know better."
Punch up the scores of speeches Obama gave on the deficit-and-debt crisis. I took him at his word when he said things like: "Those of us who care deeply about programs like Medicare must embrace the need for modest reforms—otherwise, our retirement programs will crowd out investments we need for our children, and jeopardize the promise of a secure retirement for future generations."
In his latest budget, Obama gives lip service to fiscal sanity, proposing about $2 trillion in deficit-reduction measures. But his own budget team acknowledges that the White House blueprint would add $6 trillion to the national debt, which is now nearly 75 percent of GDP.
That's not to say Obama's ideas are reckless. Big investments are needed in infrastructure and education to modernize the economy and tackle the decades-old problems of wage stagnation, income inequality, and a declining social mobility.
What Ryan calls "top-down redistribution" is shared sacrifice—people who've successfully crossed the bridge to the 21st century investing in a once-every-century American transition, from one economy to the next, on the scale of what this country accomplished at the turn of the 20th century.
That will require the arrogance of bold thinking and the humility of compromise. Raise taxes on the rich, and close tax loopholes. Cut and modernize entitlement programs while those affected are young enough to adjust. Invest in people and crumbling infrastructure.
Don't heed the sirens of false choices. But listen closely: Together, believe it or not, they've got all the right answers.
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