As events abroad rivet the media’s attention, the outlines are being drawn for a fiscal debate that will shape both the 2012 election and our economic future. Over the past few weeks, important documents have appeared which make it clear that the situation is extremely dire—but also that the public is unaware of, or in denial about, the trade-offs needed to remedy our predicament. The only solution is for President Obama to engage with Congress and begin educating the public by explaining why we need not short-term spending cuts, but long-term fiscal balance. And he needs to start now.
Several days ago, the Congressional Budget Office (CBO) released its preliminary analysis of the fiscal impact of the president’s FY2012 budget proposal. Its findings were not pretty. In no year between now and 2021 would deficits fall below 4 percent of GDP. Over the next decade, enacting the president’s proposal would create deficits totaling $9.5 trillion, $2.7 trillion more than the cumulative deficit in CBO’s baseline budget. Federal debt held by the public would double from $10.4 trillion to $20.8 trillion, 87 percent of GDP, and annual interest on the debt would rise from 1.4 percent of GDP to nearly 4 percent. Even if the share of the debt held by foreign investors and governments does not increase over the next decade, CBO’s projection suggests that we’ll be shipping fully 2 percent of our GDP (almost $500 billion) overseas each year by the end of the decade, just to pay the interest on foreign holdings of U.S. government debt.
Whatever one may think about the size, timing, and appropriateness of short-term budget cuts, the CBO report adds precision to the common view that our long-term fiscal course is unsustainable. If you believe, as I do, that the best approach melds continued short-term fiscal ease with long-term restraint, then moving toward the long-term discussion as soon as possible is essential, for the simple reason that there’s no viable political path to the former that is not linked to the latter.
It’s clear that President Obama could do more to make this a reality. During the same time period, 64 senators—32 Democrats (60 percent of their caucus), 32 Republicans (70 percent of theirs)—sent a letter to President Obama urging him to “engage in a broader discussion about a comprehensive deficit reduction package.” Referring to the work of the president’s own fiscal commission, the letter went on to define the meaning of “broader”: “Specifically, we hope that the discussion will include discretionary spending cuts, entitlement changes and tax reform.” While some observers have dismissed this demarche as odd or inconsequential, it is anything but that—especially in these polarized times. Beyond the adjective “broader,” the most important words in the letter were a verb and a noun. By “engage,” the senators meant, “Mr. President, please get off the sidelines and get personally involved, because this process can’t succeed without your active participation.” And by “discussion” they meant an ongoing face-to-face dialogue, not occasional presidential monologues with little follow-up.
Meanwhile, the public is agitated but unsure how to solve the problem. On March 21, Gallup issued its latest survey of public concerns, and the economy remains at the top of the list, with 71 percent reporting that they worry about it “a great deal.” The budget deficit/federal spending is a strong second, at 64 percent. Notably, there is a wide gap between Democrats and Independents on this issue: While Independents rank spending/deficits second on their list, behind only the economy, these fiscal issues don’t appear at all on the Democrats’ list of top concerns.
Yet as a gap in the latest Pew Center survey underscores, regarding our fiscal condition as a serious problem is one thing, but endorsing a serious remedy is quite another. By a margin of 2 to 1, the public favors cuts in domestic spending. That’s where support for fiscal stabilization ends. American are split down the middle (47 percent in favor, 49 percent opposed) on cutting military spending, they reject changes to Social Security and Medicare by 65 percent to 30 percent, and they oppose raising taxes by a similar 67 percent to 30 percent. Compared to six years ago, support for cutting discretionary spending, domestic and military, has risen significantly, while opposition to tax increases hasn’t budged.
For the most part, these sentiments cross party lines. Seventy-five percent of Democrats oppose changes to Social Security and Medicare, but so do 61 percent of Independents and 59 percent of Republicans. Seventy-six percent of Republicans oppose tax increases, as do 67 percent of Independents and 61 percent of Democrats. Seventy-one percent of Republicans favor cuts in domestic spending, but so do 60 percent of Independents and even 54 percent of Democrats. The only area of significant disagreement is defense, where 57 percent of Democrats and 52 percent of Independents favor cuts, compared to only 33 percent of Republicans.
No budget analyst who has mastered fourth-grade arithmetic believes that we can regain control of our fiscal future solely through reductions in discretionary spending. The Pew survey makes it clear (if further evidence were needed) that public concern about the problem far outruns public understanding of its sources and scope. As I have argued, the only way to change these public attitudes is to level with the people about our fiscal situation and educate them about the true choices we face. This task is essential and long overdue. But if former professor Obama isn’t willing to take the lead, it’s hard to see how an informed public discussion can ever begin.
William Galston is a contributing editor for The New Republic. He is also a former policy advisor to Bill Clinton and current senior fellow at the Brookings Institution.