Outside of the rhetoric and the partisanship, it is fair to say that the debate about the deficit and the debt is shaping up as a classic one over the role of government and the kind of country Americans want to build for their children. On the one side, Republican House Budget Committee Chairman Paul Ryan has been rightly commended for his audacity and courage to put his proposals forward at great risk. And, on the other, President Obama has finally made it clear where he stands and where he wants to take the country.
Both men acknowledge the need for important and drastic cuts in spending. They both recognize that the current path is unsustainable. The deficit is right now hovering at about 10 per cent of GDP and the debt is over 90% of GDP. Where Ryan and Obama differ is on the solutions. Ryan wants an overhaul of major entitlement programs such as Medicare and Medicaid, and wants to repeal Obama’s healthcare reform. The Bush tax cuts would become permanent under Ryan’s plan, which also calls for a reform of the tax code.
Obama’s approach keeps the major entitlement programs intact, but puts in place mechanisms to produce operational cuts. Elsewhere, Obama is promising to eliminate the Bush tax cuts on those earning over $250,000, calls for important cuts to defense spending, and also proposes to reform the tax code. Obama has made a compelling case for the kind of country he believes Americans want—compassionate and fair. In so doing, he may have re-energized his supporters who have found him far too compromising of late.
Meanwhile, a bipartisan group of six senators is working on a compromise solution. Its work will be inspired by the compromise spirit that prevented last week’s government shutdown, the contrasting Obama/Ryan visions, and the conclusions of the president’s debt and deficit commission led by former chief of staff Erskine Bowles and former senator Alan Simpson. This will all be added to the mix just as the Republican presidential nomination process kicks in.
The initial reactions seem to pit right against left, red against blue, small against big, and rich against less rich (i.e.the middle class). Media pundits reflect these assessments. It is highly likely that the battle lines are now drawn for the debt ceiling debate in the coming weeks, the 2011-2012 budget negotiations between the White House and the Republican-controlled House, and the 2012 presidential election.
As matters stand, Obama’s approach seems to have more potential with the electorate, which generally favours the longstanding entitlement programs. Ryan’s desire to make the Bush tax cuts on the rich permanent and to turn Medicare into a voucher program, opening the way for private insurers, makes it more daring but far more controversial and less voter-friendly.
The Republicans in the House have endorsed Ryan’s approach, which will place an obligation on the GOP presidential challenger in 2012 ( not easy if your name is Mitt Romney and you passed a health care reform bill similar to Obama’s as Governor), Obama has succeeded in remotivating his base by what they have seen in last week’s speech as the line in the sand.The face of America is in for an historic confrontation. Let the battle begin.