In what should come as a surprise to nobody, negotiations between Democrats and Republicans to avoid the fiscal cliff have gotten off to a rocky start. As with the debt ceiling negotiations and the failed “Grand Bargain” deficit reduction talks last year, the two sides appear to be nowhere even close to striking a deal.
In order for the country to get on a sustainable spending path while allowing the economy to continue growing, both sides need to make concessions.
For starters, Republicans need to drop their anti-tax crusade. One of the central themes of the 2012 campaign season was taxes and the role they play in deficit reduction. President Barack Obama ran on the idea of fairness, continually demanding that the Bush tax cuts on income over $250,000 expire so that the middle class and the elderly aren’t the only ones making sacrifices.
Obama was re-elected by a comfortable margin, and exit polls revealed that a solid majority of Americans support Obama’s tax plan. For all the talk about a Republican makeover in the wake of defeat, one would think the party would move back to the middle and stop holding middle-class tax cuts hostage to upper-income ones.
That’s not the case, though. Speaker of the House John Boehner and most (but not all) top Republicans have rejected any talk of tax increases. What they need to realize is that returning to the Clinton-era tax rates on earned income over $250,000 would not create a socialist hellscape, but rather would raise nearly $1 trillion in revenue over a decade. To borrow a phrase from Bill Clinton, that’s arithmetic.
Raising tax revenue won’t be enough to solve the nation’s fiscal woes, however.
Obama’s victory speech on election night echoed the post-partisan themes that won him his first term in office four years ago. Now it’s time for him to walk the walk.
While attempting to compromise with today’s congressional Republicans would be difficult for any president, it is important that Obama and his fellow Democrats signal a willingness to make concessions of their own. That includes spending cuts to bloated federal programs and changes to entitlement programs like Medicare.
If the Democratic Party is serious about Medicare and its long-term health, raising the eligibility age from 65 to 67 over time would be a wise move. Given the increased life expectancy rate since it was passed in 1965, the move would preserve the program’s promise to the nation’s seniors while reigning in out-of-control spending.