Editorial New York Times
The President’s Budget
By THE EDITORIAL BOARD
Published: April 10, 2013
President Obama knew full well that many Democrats and liberals would be
sharply critical of his decision to propose reducing the Social
Security cost-of-living adjustment, one of the centerpieces of his 2014 budget,
which was released on Wednesday. In fact, he was counting on it. He
wanted to show that he was willing to antagonize his supporters to get a
budget compromise, putting Republicans on the spot to do the same.
Naturally, Republicans refused. Curbing the rise of Social Security
benefits and raising Medicare premiums for higher-income people were two
of the highest priorities for Republican leaders just a few months ago.
Senator Mitch McConnell, the minority leader, said last fall that if Mr. Obama proposed them, he would consider allowing tax revenue to go up.
But, on Wednesday, when the president actually did so, Mr. McConnell
dismissed the budget as unserious. Not a single Congressional Republican
could be found to consider a budget that combines twice as much in
spending cuts as it raises in tax revenues.
The Social Security proposal remains a bad idea, and, as this page has explained,
it could hurt vulnerable retirees and stymie better ideas to improve
the system, like raising the wage cap subject to the payroll tax. But it
seems unlikely to happen if Mr. Obama holds to his demand for more
revenues in exchange, given the Republican intransigence. For now, it
has served its purpose — no one will be able to accuse Mr. Obama of
refusing to touch entitlements, and no one can credit Republicans for
being at all serious about a deficit-reduction compromise.
Rejecting the president’s budget also means passing over a host of good
ideas — chief among them, replacing the arbitrary and damaging
sequestration cuts with more sensible reductions, along with ways to
make the rich pay a larger share of revenues.
The plan would cut spending by about $1.2 trillion over a decade, which
is more than is necessary and more than Mr. Obama previously offered.
The cuts include $306 billion from Medicare providers by relying more on
generic drugs and demanding greater efficiencies from doctors and
hospitals. Drug companies would have to pay a much larger share of the
costs borne by low-income Medicare recipients. Farm subsidies would be
cut by $38 billion, and spending on the military, the State Department
and homeland security would also be reduced.
Couples with incomes starting at about $170,000 a year would have to pay
about 5 percentage points more for Medicare premiums. And there would
be several other significant tax increases: The carried-interest tax
break used by wealthy hedge fund operators would rise to ordinary-income
levels, overall tax breaks for couples making more than $250,000 would
be reduced, and a “Buffett Rule” that would ensure that millionaires pay
at least 30 percent of their income in taxes. The federal cigarette tax
would almost double to $1.95 a pack. Collectively, new revenues would
bring in about $600 billion in a decade.
Much of that would help pay for needed new spending, including $166
billion for public works and $77 billion for early-childhood education.
Mr. Obama reiterated his call to use investments in research and
manufacturing to spur growth, particularly in high-skill jobs.
It is clear that the incessant demands by Republicans for entitlement cuts were always hollow; some have already said the budget hurts older people.
The growing impact of the sequester cuts will also make it clear that
Republicans are rejecting a far more rational way to govern.
