Obama’s legacy rests on reducing the debt

Second presidential terms build legacies, and this president’s will be tied solidly to the decisions he makes about the national debt and the budget. He cannot leave the office with the debt approaching $20 trillion and expect history will look kindly upon his fiscal management of the nation. 

So how is he doing in the first 100 days on this front? He is off to a good start, and it is certainly a lot better than he did in his last four years. 

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The budget President Obama offered was more serious than many of his other recent proposals. By including the chained CPI — a technical improvement to how we measure inflation that would help to extend the life of Social Security and increase revenue for the federal government — he sent a real signal that he is willing to discuss the kinds of more serious entitlement reforms that will have to be part of any deal. 

And his so-called “charm offensive” seems to be going well. It is nothing short of absurd how little the president has interacted with members of Congress — including those from his own party — on these issues in the past. And the dinner series he initiated seems to be helping to start a real discussion. It’s hard to solve problems when no one is even talking. 

But the real question is where this goes in the next 100 days. There isn’t much time; we need to get a deal hammered out before the country hits the debt ceiling late this summer or early fall. 

This will take a lot more than raising tax rates on the rich, or even grudgingly dipping his toe in entitlement reform, as the president has talked about so far. While it is laudable that we have reduced the deficit in the past two years from where it otherwise would have been, we have only done the relatively easy policies thus far. Putting in place spending caps where you don’t have to specify what programs will change (and you have to count on Congress to make the promised savings stick — not a great track record here) and raising tax rates on the very well off are a start. 

Next up: the tough stuff. 

All told, we have achieved about half of the savings we need to reach a minimum target. Now in the next tranche, we have to tackle the much harder parts: entitlement and tax reform. The good news is that the tax committees are making impressive progress on moving forward with tax reform, which would broaden the base; lower rates; simplify the system; make it far more equitable and competitive; and raise revenue for the federal government in a much better way.

Where the president is going to have to really use his leadership is to help make the case for entitlement reform and why we have to make the needed changes to control healthcare costs and adjust the nation’s retirement system for growing life expectancies. He should make the case to Democrats on why they should prefer Social Security and Medicare reform under his presidency, and he needs to make the case to the nation as a whole about why putting a fiscal deal in place is so important and how the economic recovery will not take off without one.

And that will be part of the test. The president’s style has been to put an issue on the agenda and then take a huge step back right out of the room. That’s not going to work on this one.

The specifics are difficult and come with political risks. He will have to own the tough policy choices right along with the Democrats and Republicans in Congress. 

And in order to make this work, he will have to use the bully pulpit as only the president can. He must make the case to the country for why a reformed tax code will make us more competitive, why we need to address the problems with entitlements in order to strengthen those programs, why a smart budget deal is part of an economic recovery strategy, why fixing the budget now will help us to preserve a strong safety net, and why we have to make the necessary investments we have been shortchanging for so long. 

A few major speeches around the country laying these issues out would make a world of difference. 

President Obama made a small down payment on his legacy in his first 100 days. Now he must invest a lot more political capital to make sure it pays off. 

MacGuineas is president of the Committee for a Responsible Federal Budget and head of the Campaign to Fix the Debt.