In a timely, revealing interview with ABC News’ George Stephanopoulos, President Obama made two striking admissions.
First, he said we were not in a serious debt crisis. And then, he indicated that the differences between him and Republicans on the budget may be too deep to bridge.
On Wednesday the White House also said it backed the budget proposed by Senate Democrats, so don’t expect too many surprises when the Administration offers its own budget next month.
In his interview with Stephanopoulos, the president said:
I think what’s important to recognize is that we’ve already cut $2.5–$2.7 trillion out of the deficit. If the sequester stays in, you’ve got over $3.5 trillion of deficit reduction already.
And, so, we don’t have an immediate crisis in terms of debt. In fact, for the next ten years, it’s gonna be in a sustainable place. The question is, can we do it smarter, can we do it better?
Let’s freeze the frame right there. The president is technically correct: We do not have a debt “crisis”—yet. Interest rates are near all-time lows, the US dollar is doing OK, and creditors have no problem lending us money.
But as 10,000 Baby Boomers a day retire and live maybe another two decades, we will have a debt crisis and a very serious one at that. By then, Medicare, Medicaid and Social Security will be a much heavier burden. Interest rates, too, will likely be a lot higher and so will the cost of servicing the debt.
Even Paul Krugman believes that, though he would rather wait ten years to deal with the problem. Maybe the president has been reading his columns too much.
And then President Obama said this of Congressional Republicans:
Ultimately, it may be that the differences are just too wide. It may be that ideologically, if their position is, “We can’t do any revenue,” or, “We can only do revenue if we gut Medicare or gut Social Security or gut Medicaid,” if that’s the position, then we’re probably not gonna be able to get a deal.
Finally, referring to the budget put out by House Budget Committee chairman Paul Ryan, President Obama said:
We’re not gonna balance the budget in ten years because if you look at what Paul Ryan does to balance the budget, it means that you have to voucherize Medicare; you have to slash deeply– into programs like Medicaid.
We analyzed the Ryan budget plan here Tuesday, and $2.5 trillion of his $4.6 trillion in cuts over the next decade come from repealing Obamacare ($1.8 trillion) and saving on interest expenses ($700 billion). Neither will happen, among the reasons that plan is smoke and mirrors.
I think the president is right that we don’t need to mathematically balance the budget, but we do need to cut the annual deficit to a sustainable 3% of GDP, where it was for many years.And I agree we need more revenue from some serious tax reform.
Still, his vaunted $3.5 trillion in deficit reduction will be for naught if we don’t begin to tackle long-term entitlement spending while rates are still low.
Not dealing with it now, the president said, “won’t create a crisis. It just means that we will have missed an opportunity.”
Of such missed opportunities are historians’ harsh judgments of presidents made. Much more may be at stake for him than he realizes.