President Obama's deficit commission lands with a predictable political thud
Debates over taxes and spending are at root about political philosophy: How big should government be? How much income should it redistribute, and to whom? I mention this to explain why today's report from President Obama's deficit commission is landing with such a predictable political thud.
This doesn't mean that Co-Chairmen Alan Simpson and Erskine Bowles haven't offered some useful ideas, much better ideas overall than we feared. As conceived by former White House budget director Peter Orszag, the commission was supposed to be a Trojan Horse for a value-added tax (VAT) to raise federal revenues to a new and much higher level than their 18.5% or so modern average.
The idea was that the proposal would sit on a shelf until deficits led to a Greek-like crisis, the bond markets demanded action, and the political class reached in desperation for the Simpson-Bowles deus ex machina. Mr. Orszag and other liberals know they need a VAT, or some other kind of new tax, to finance ObamaCare and their other spending ambitions. What they want is a political device to lure Republicans into voting for it.
Simpson and Bowles rejected the VAT ruse, but their plan is still one of those Beltway specials that fudges the debate over what government should do. Instead, it tries to package things that everyone dislikes in the hope that everyone will swallow the castor oil at the same time. Such proposals never have a chance unless Presidents and Congressional leaders sign on, and in this case Democrats are already in open revolt, while Republicans are saying nicer things than Mr. Obama is about his own commission.
Longer-term, the problems are the liberal entitlements of Medicare, Medicaid, Social Security, and, starting in 2014, ObamaCare, which will add about 20 million new patients to the Medicaid rolls and not one doctor. Democrats want to keep these programs as they are and pay for them with much higher taxes—first by balancing the budget at 25% of GDP, and later by necessity at 30%, 40% or more. The alternative—which we support—is to reform the programs and reduce their scope.
Yet, incredibly, the Simpson-Bowles report has almost nothing to say about the runaway health-care entitlements. This is a blow to the left and the White House, which cut Medicare by $500 billion to finance a corner of ObamaCare and wants its signature achievement untouched. But this is like doing a Pentagon budget review and excluding