President missed opportunity to set stage for debt deal, deficit hawks say

Watchdog groups dedicated to reducing the deficit are expressing major disappointment with President Obama's State of the Union address.

They contend the president could have set the table for a major bipartisan deal on cutting the nation's record debt.

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In his speech, Obama promised to veto any bill with earmarks and said his 2012 budget proposal will call for a five-year freeze in non-defense discretionary spending.

Experts on the deficit say Obama should have gone much further, adding these initiatives will do little to reduce the deficit. And Republican rhetoric has also fallen short, they contend.

“Developments this week don't auger well for dealing with the debt,” Concord Coalition Executive Director Bob Bixby said Friday.

Obama did not call for a fiscal summit or endorse the efforts of his own debt commission to make relatively small cuts to Social Security. He alluded to the fact that out-of-control healthcare costs are a problem, but did not push for a solution within a specific timeframe.

Republicans responded by going on the attack, calling for immediate cuts to discretionary spending, something some nonpartisan experts say could damage the slow economic recovery while failing to make a significant dent in the overall deficit.

Bixby said Wednesday's numbers from the Congressional Budget Office showing the deficit growing this year to a record $1.5 trillion “clearly demonstrated how deep the fiscal hole is … but the president essentially punted” on hard choices.

He said Obama “retreated to the politically safe ground of unspecified freezes and economic growth, driven by his competitiveness agenda.”

“Not that the Republicans covered themselves with glory in this regard,” he added, noting the GOP focus on non-security discretionary cuts.

“We're stuck with a fierce debate over a narrow slice of the budget — and one that represents the least of our fiscal challenges,” he said.

“I am feeling disappointed,” Maya MacGuineas of the New America Foundation said.

“What [Obama] needed to do was elevate it to an action item, to say that 2011 is the year to get this done,” she said. “If he doesn’t initiate the discussion and force it, it makes it harder for members of Congress who want a compromise solution to negotiate one.”

She said Obama should have embraced the debt-commission report because it came with the built-in political cover that some Republicans had voted for it.

Many liberal groups in recent weeks had lobbied the White House not to back any cuts to Social Security.

MacGuineas is working with a bipartisan group of senators led by Sens. Mark Warner (D-Va.) and Saxby Chambliss (R-Ga.) to turn the debt commission’s report into legislation.

Senate Budget Committee Chairman Kent Conrad (D-N.D.) is part of that effort. He expressed frustration Thursday that the White House has not gotten behind his call for an emergency budget summit.

Because of this, Conrad said his panel might have to forge a long-term budget plan. But he acknowledged it would be difficult for Budget to do it because negotiations inside the committee would not have the participation of senators on the tax-writing and Appropriations committees.

Focusing on a five-year freeze in discretionary spending is woefully inadequate, MacGuineas said.

The GOP response to Obama by House Budget Committee Chairman Paul Ryan (R-Wis.) was good on substance but illustrated that Ryan and the GOP are putting confrontation over compromise, she said.

Bipartisan Policy Center Senior Director Steve Bell, a former chief of staff for former Senate Budget Committee Chairman Pete Domenici (R-N.M.), said he is feeling gloomy after the State of the Union and GOP reaction.

He said that it is now clear nothing significant will happen on the debt for at least the next two years, since Obama and the GOP used the moment to play to their political bases.

The way to get a budget compromise, such as the one between President Clinton and Congress in 1997, is for the president to say to his political opponents that they are “willing to jump off the political cliff together,” he said.

In an ideal world, he said, “Obama should have said, ‘I am here to announce that last week I invited the leaders of both parties in both houses of Congress to a private meeting that I am only announcing now. We have agreed to a 15-year plan that would begin to get the structural changes in our economy needed to address the national debt. It means everyone is going to have to sacrifice.' "

Rebecca Thiess, a policy analyst at the left-leaning Economic Policy Institute, offered an opposing view. She said Obama was right not to focus too much on the deficit.

She acknowledged that Obama’s spending freeze will not do much to deal with the deficit problem, but asserted even the freeze is too much of a cut, too soon.

“The amount of cash it saves over five years — $400 billion — is just a drop in the bucket when compared with 10-year deficits of $7 trillion, as the recent CBO tables tell us,” she said.

But she said Obama’s focus right now should be on jobs, not on deficit reduction.

Speaking for many progressives, she said that “it was good to hear Obama get it right and leave Social Security out of the blame game.”

Bell said he understands the argument, embraced by liberals, that deep cuts to spending during the recovery are counterproductive. Because of this, a Bipartisan Policy Center budget blueprint delayed such cuts for a full year.