Reforming entitlements

Nonpartisan analysts have long said that in order to attack the nation’s massive debt, policymakers must tackle entitlements and defense spending. 

Lawmakers have blocked annual cost-of-living-adjustments for their own salaries and cut the congressional budget. The House has embraced a moratorium on earmarks, as has the Senate Appropriations Committee.

{mosads}But these steps, while important, do little to address the nation’s gloomy fiscal future.

When President Obama announced his bipartisan fiscal commission last year, he said, “Everything’s on the table.”

The commission, headed by former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles, subsequently issued massive reform proposals that both the left and right criticized. 

Last November, then-Speaker Nancy Pelosi (D-Calif.) called the plan “unacceptable.” The conservative-leaning Americans for Tax Reform decried it as raising taxes by $1 trillion. 

While the plan didn’t get the supermajority it needed to be formally approved, the recommendations were backed by Senate Majority Whip Dick Durbin (D-Ill.) and conservative Sen. Tom Coburn (R-Okla.), among others.

What happens now? A key indicator will be Obama’s budget blueprint, due for release next week.

Some Republicans want to reform entitlements but say they won’t do so unless the president takes the lead. 

Liberals have been very nervous that Obama will call for the retirement age to be raised for future generations of Social Security recipients, an idea that has been embraced by Republicans and centrist Democrats. To the relief of the left, the president did not go that far in his State of the Union address. But his budget plan might.

Social Security has been called the third rail of American politics: Touch it and you die. Yet Social Security is easier to deal with than either tax reform or Medicare/Medicaid. 

No major tax reform bill has moved over the last decade, while Medicare and Medicaid have been altered by both parties in recent years.

Still, the partisan battle over healthcare reform makes touching Medicare and Medicaid in 2011 extremely unlikely.

So what’s left of the “Big Four” spending items are Social Security and defense spending. 

In a shift, Republicans on Capitol Hill say they are open to cuts to the Pentagon, as is Defense Secretary Robert Gates. But most congressional Democrats want to cut defense spending by much more than the GOP is prepared to contemplate.

Solving the budget dilemma will take leadership, compromises and thick skin. Fiscal restraint is the talk of the town. But talk is easier than action, and freezing lawmaker salaries and banning earmarks, though laudable in themselves, are more like the former than the latter.

They are symbolic (and not to be sneered at for that) and are meant to look like action. But really they are window dressing — decoration around the edges of what’s important.

The extent to which the federal government gets to the real deal is the big issue of this Congress.