President Barack Obama’s proposed $3.8 trillion budget is out, and both liberals and conservatives are screaming. In a way, that’s the point.
The key concept for the president is a simple one: shared sacrifice. He asks Republicans to accept tax increases and public investment, and Democrats to accept trims in entitlements.
Sequester cuts require $1.2 trillion in automatic government-wide spending reductions over the next decade. The president’s budget would replace the sequester with a larger $1.8 trillion reduction in targeted spending cuts.
It also would raise $580 billion in new revenue, which would be used for such things as road and bridge repair, new schools and other education investments. Much of the revenue would come from raising taxes on tobacco users and capping the amount of money that wealthy Americans can invest in tax-protected retirement accounts.
On entitlements, Mr. Obama proposes that cost-of-living Social Security increases will no longer be based on the Consumer Price Index, but something called the “chained” CPI. This index takes into account the ways consumers make economic choices. Benefit increases based on the chained CPI are a little smaller than ones based on the traditional CPI.
So the savings in Social Security come not from a “cut” in benefits, as it is so often described. It comes from smaller raises. Yet liberals are angry. Many Democrats feel that any compromise of entitlements is a betrayal of their constituency.
With some justification, they say the president gave up far more in last year’s budget negotiations than Republicans did, and still got left at the altar. But Mr. Obama knows he gets no deal without asking his team to take a hit.
Republicans are unhappy because the president’s budget calls for tax increases, and that is the GOP third rail. Any form of tax increase is verboten.
To his credit, the president is trying to get the budget debate back to shared sacrifice. He says government can do two smart things at once: reduce the national debt and stimulate the economy with modest public works spending. If Congress stays in uncompromising partisan mode, each party will insist that the nation can do one of these things, but the paralysis will ensure it does neither.