Debt's hard decisions skipped, experts say

McClatchy NewspapersAugust 1, 2011 

— The outline emerging Sunday night of a deal to raise the debt ceiling and execute deep cuts in federal spending disappointed budget experts, who fear that the agreement was politically expedient but appears to fall far short of serious changes to the big cost drivers of government spending.

"If all you can say is this, after 12 weeks of intense wrangling, charges and counter charges, if all they can do is pass the basic debt limit, we're very disappointed," said Steve Bell, a senior director at the Bipartisan Policy Center, a research group comprised of former Democratic and Republican powerbrokers that late last year offered an exhaustive plan to tackle the nation's fiscal problems.

What irked Bell and other budget experts was the blueprint emerging from congressional and White House officials that appeared to take off the table serious attempts to address military spending or changes to Social Security, Medicare and Medicaid - the so-called entitlement programs.

Most of the cuts agreed on during three-way negotiations between the White House and Senate leaders from each side of the aisle were in discretionary spending. They agreed to make steep cuts over 10 years to a segment of the budget that accounts for less than a fifth of federal spending.

"It is business as usual," said a disappointed Bob Bixby, executive director of the Concord Coalition, a bipartisan budget watchdog organization. "For people that bragged about not doing business as usual, it is business as usual."

The biggest threat to the federal budget comes from Medicare spending. It's projected to explode in coming years as the first wave of Baby Boomers - roughly 76 million Americans born between 1946 and 1964 - has already reached retirement age.

As they age, their medical needs will grow, and medical costs rise with technological advances. This dynamic will challenge the nation's federal spending as never before.

Republicans want to radically alter entitlement programs; Democrats want changes on the margins and favor new ways to fund it. Republicans demanded no new taxes, resisted President Barack Obama's attempts to restore a higher tax bracket for earners with taxable income above $250,000 a year and fought off attempts to scale back popular tax deductions such as mortgage interest.

Leaders of a bipartisan presidential commission last December proposed many such remedies in a report entitled "Moment of Truth." But Obama never fully endorsed the detailed urgings of the National Commission on Fiscal Responsibility and Reform, nor did congressional leaders of either party. The Bipartisan Policy Center offered a similarly detailed report that even called for a national sales tax tied to getting the nation's ratio of debt down to economic activity.

Both Bell and Bixby criticized Obama for failing to think big and lead on tackling entitlement spending - the nation's inescapable fiscal challenge. Like his predecessor, George W. Bush, Obama formed a presidential commission to make recommendations that he then ignored. Now the new "deal" calls for another new committee to make more recommendations.

"He has not supported really important structural changes in Medicare, Medicaid or pensions at all during this entire process," said Bell, who was equally critical of Republicans for an unwillingness to change tax deductions or consider new taxes.

Addressing the nation Sunday night, Obama said he recognized a need for "modest" changes to Medicare and said there was still a chance that another bipartisan commission being established as part of the deal could yet bring reforms to entitlement spending.

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