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I am sure Barack Obama will deliver a stirring Inaugural address tomorrow. However, Obama’s most important remarks since his election came in an interview the other day with The Washington Post. There, he promised to convene a bipartisan fiscal summit in February. This has the potential to be the most important step of his Presidency. Yes, at least as important as fixing the immediate economic mess.
It is not the idea of a summit that is so critical—we’ve seen plenty of those in recent years. Nor was it his vow to use some of his copious political capital to confront the controversial issues of Medicare, Medicaid, and Social Security. We’ve heard that promise before too. It was just four years ago that George Bush made precisely the same vow to tackle Social Security. And we all know how that one ended up.
No, it is neither the summit nor the confident commitment that is so important. It is instead, the language he used in his meeting with The Post.
In his discussion of Medicare, for instance, Obama was channeling Peter Orszag, his nominee for Budget Director. When he says, “You can’t solve Medicare in isolation from the broader problems of the health-care system,” that is pure Orszag. So is his talk of “bending the curve” of medical spending (econo-speak for sharply slowing the rate of health cost growth).
Orszag’s (and now Obama’s) diagnosis is on the mark. The cure, however, will be exceedingly difficult.
And it will take a lot more than fine words.
On Social Security, for instance, Obama breezily told The Post, “Social Security, we can solve.” No problem.
Well, he’ll have to do a lot more than what he promised in the campaign, when his plan centered on rising payroll taxes for a handful of wealthy workers—two years after the end of his second term. That is no way to fix Social Security.
By now, I’m sure Obama knows that in any bipartisan deal, reducing promised future benefits will have to be part of the mix. Period. And that is going to seriously antagonize his friends on the left. On the other hand, Obama is correct when he recognizes that Social Security is the easy bet in the entitlement trifecta.
When it comes to Medicare, “bending the curve” means rationing care. It means, somehow, convincing Americans that the most expensive treatment is not always (or even often) the best care. It means telling them, for example, that Medicare is not going to pay for that back surgery because exercise and anti-inflammatory drugs work just as well, and at far less cost. That is going to anger patients and doctors.
Long-term fiscal reform also means sensible tax policy. And by promising to exempt anyone making up to $200,000 from any tax increases, Obama has built himself something of a fiscal box. I’m sure Orszag and others have told him that by now as well.
Still, the post-election Obama sounds like he gets it, or, at least for now, he’s listening to people who do. Let’s all hope it lasts.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.