JONATHAN COHN APRIL 11, 2011
A big reason I worry about Obama’s plan to outline new principles on deficit reduction is that whatever he says is likely to become the left boundary of political debate. And Obama is simply not that far to the left, philosophically or temperamentally.
In Wednesday's speech, Obama will probably call for restoring tax rates on the wealthy to what they were during the Clinton era, while controlling health care costs more aggressively via the mechanisms of the Affordable Care Act. Those are all very worthy positions but, taken together, they don't really represent a liberal mirror image to Ryan's conservative agenda.
Remember, the Ryan plan would end the entitlement status of both Medicare and Medicaid, reducing the reach of each program substantially. By 2030, the average senior on Medicare would be responsible for more than two-thirds of his or her medical expenses, according to the Congressional Budget Office. Overall, two-thirds of the Ryan plan's cuts would come from programs that serve the poor, even as it extends (or creates) tax cuts for the wealthy. That’s a massive downsizing of the welfare state and, not at all coincidentally, a huge shift of resources from the poor to the rich. As E.J. Dionne noted today on the Diane Rehm show, even Ronald Reagan never proposed anything that far to the right.
An equally extreme proposal on the left would balance the budget, first, by raising new taxes--on everybody and, most likely, with particular levies on carbon. I doubt Obama will endorse either idea in his speech. A seriously left-wing proposal would also seek to reduce overall health care costs (as well as those incurred by the government and individuals) more aggressively than the Affordable Care Act does, by using the kind of blunt, global price controls you get in single-payer systems. In other words, a truly left-wing alternative on health care reform might actually justify the label “government-run health care.”
A compromise that represented a middle ground between that kind of plan and Ryan’s might be worth contemplating. But you'll find nothing along those lines in the debate right now. Yes, a number of liberal plans are circulating, the most detailed of which is probably the “Our Fiscal Future" proposal from Demos, the Century Fund, and the Economic Policy Institute. And it would be helpful indeed if plans like this got more attention, as Representative Jan Schakowsky and the Congressional Progressive Caucus have been urging. But “Our Fiscal Future” doesn't call for system-wide health care price controls; it merely calls for creating a public option, as the architects of the Affordable Care Act originally envisioned. In that respect, and others, the current liberal alternatives are more firmly in what I'd consider the political mainstream than either my imaginary left-wing plan or Ryan's not-so-imaginary right-wing alternative.
By the way, either the mainstream or extreme liberal alternatives would do more to reduce the deficit than Ryan's would, at least in the short term. But that's another story for another post, coming soon.
Update: I added that last paragraph after posting and tweaked the wording of the previous one. Also, just for the record, I actually don't think Obama should propose my imaginary left-wing proposal. But I'd love to see somebody in the Democratic Party propose it--and to see Obama treat it at least as seriously as he treats Ryan's proposal.
Note: I am a senior fellow at Demos.