Obama must promote shared sacrifice to reduce deficit

BY IRWIN STOOLMACHER

COMMENTARY

The comprehensive debt reduction plans developed by President Obama’s National Commission on Fiscal Responsibility and the Bipartisan Policy Center’s Debt Task Force were both sincere efforts to reduce America’s staggering $1.75 trillion deficit. Both plans contained many thoughtful recommendations that, if implemented, could stabilize the nation’s debt by 2015.

Unfortunately, no elected official, including President Obama, has been willing to touch the more salient recommendations, especially those relating to the entitlements – Social Security, Medicaid and Medicare – which along with over the top military spending are at the root of the deficit problem and must be trimmed.

To date, the proposed budget cuts have been trimming along the edges, e.g., cutting $1 billion from nutritional support for low-income women, reducing by $1.4 billion training and employment grants to states, and eliminating $350 million in funding for community-action agencies. Neither party has proposed deep spending cuts in entitlements or substantially higher taxes as recommended by the bipartisan bodies. Nevertheless, even more modest cuts have sparked anger among liberals who view them as short-sighted and evidence of a lack of commitment to the needs of the vulnerable. Likewise, any talk of tax increases for the wealthy, even though taxes are relatively low after the reductions of recent years, has been met with equal disdain from Anti-Tax Conservatives and Tea Party adherents.

I think President Obama is missing a golden opportunity to do what is right for the country and hit a home run politically by not taking the lead on deficit reduction. Research conducted by Albert Alesina of Harvard University found that, contrary to conventional political wisdom, politicians worldwide who enact austerity measures are often not punished by the electorate, but are rather rewarded by reelection.

Couple this finding with recent polling data that found that less than a third of the public are satisfied with the size of the federal government and the popularity of Governor Christie, and you can see why I feel the President’s unwillingness to get too close to the “third rail” in American politics is a both a failure of leadership and a political miscalculation.

In this dog-eat-dog-world, is it possible for the President to convince the American people to “sacrifice” to reduce the nation’s deficit, e.g., work longer to get retirement benefits, accept means tests for certain benefits and pay higher taxes? The nation met the challenge when FDR call for “self denial” and “shared sacrifice” after the attack on Pearl Harbor. Would the American people embrace the notion of “shared sacrifice” if there is no tangible enemy? Or is this a tragically lost ethos? I’m enough of an optimist to think it is still possible to appeal to our better instincts and to convince us to sacrifice for the good of each other and for future generations.

First, however, the President would need to make a powerful case as to why the growing deficit is destroying us from within and why reducing the deficit is the moral equivalent of war. If anyone can do that, it’s President Obama – the master communicator.

Next, the President would need to persuade us, as FDR did in his April 24, 1942 “Total War and Total Effort” speech, of the equality of the sacrifice. “Every single person in the United States is going to be affected by this program…. Are you a business man, or do you own stock in a business corporation? Well, your profits are going to be cut down to a reasonable low level by taxation. Your income will be subject to higher taxes… I do not think that any American citizen should have a net income in excess of $25,000 per year after the payment of taxes.”

So far in his presidency Barack Obama has not issued any clarion call to our citizens to “bear any burdens” or “pay any price” to remain that “shining city on the hill.” He will need to do that if he is going to reduce the deficit that is strangling our nation. It can only be addressed through a collective effort in which we all share the pain.

With regard to the deficit, I’d like to see the President become an abattoir of sacred cows. One place to start would be the current retirement age for Social Security. Currently the retirement age is sixty-six, and starting in 2021, it is scheduled to gradually increase to sixty-seven at the rate of two months a year. As Americans are living and working longer than previous generations, I think the President should champion a nationwide discussion on gradually increasing the retirement age to 68-70.

I’d also like to see a frank discussion of the impact of cutting additional dollars from the nation’s $720 billion military budget (which is double the combined military budgets of China, Russia, Iran, North Korea, and Cuba).

To date, President Obama has not emerged as a transformational president. If he fails to address the budget deficit and it continues to grow during his presidency, I believe he will be vulnerable in 2012 to competition from a decisive Republican governor who comes across as having “addressed the deficit problem head-on in an equitable manner.”

Irwin Stoolmacher is President of Stoolmacher Consultant Group, which consults to the nonprofit sector.