It had to come to this. After getting his nose bloodied every time he offered Republicans a reasonable compromise on debt reduction -- balancing spending cuts and tax offsets -- President Obama finally had to acknowledge that there will be no budget compromise short of a plebiscite. That, apparently, will come in the 2012 elections.
For the interim this year and next, Obama has at last drawn a blunt and necessary line in the sand: He promised Monday to veto any proposal from the joint House-Senate debt-reduction committee that relies solely on spending cuts to such vital programs as Social Security and Medicare, and that fails to raise revenue by closing corporate tax loopholes and ending the previous Bush administration's enormously unfair tax cuts for the ultra-wealthy, who now enjoy effective tax rates far lower than those on ordinary Americans.
In making that pledge, he issued his own proposal to cut $3 trillion over the next 10 years from the nation's projected federal debt, in addition to the $1 trillion agreed to in the summer debt-ceiling accord. Roughly half of the new $3 trillion in savings would result from reductions in spending, and the other half from tax increases, which Republicans have promised to deny.
Obama rightly and passionately emphasized that a balance of spending cuts and tax increases was required for basic fairness.
"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," he asserted. "This is not class warfare," he declared. "It's math."
The tax increases would come from letting the high-end Bush tax cuts expire for the wealthiest 2 percent of Americans, and from reform of the corporate tax structure. That's imminently fair. The needless Bush tax-cuts lavished the bulk of the benefits on the richest 1 percent of Americans -- the multi-millionaires and billionaires who reaped the lion's share of the immense dividend, capital gains and income tax breaks. Reform of the corporate tax codes is equally vital. Current loopholes typically let more than half of the nation's rich corporations avoid paying any taxes.
Obama's proposed spending cuts would include $580 billion in health and entitlement programs, including $248 billion in Medicare and $72 billion in Medicaid over the next decade. Medicare savings under Obama's proposal, however, would not entail an increase in Medicare eligibility age or core benefits. Rather, they would end the egregious subsidies to for-profit insurers that Republicans shifted from the general Medicare budget to the insurance industry in the 2003 Medicare modernization act. Another $1.1 trillion in spending cuts would come from ending the wars and withdrawing from Afghanistan and Iraq.
Obama's proposal marks a welcome shift in his own leadership, and in the debate on the best way to reduce national debt down to the affordable 2-to-3 percent range of GDP over the decade. It offers a direct and necessary counter-point to the irrational Republican mantra that it's unfair, untimely and wrong to require the nation's most privileged and rich corporations and super-wealthy individuals to give up their egregiously unfair tax advantages and pay a fair-share of the burden to reduce the nation's cumulative debt.
Indeed, roughly half of the nation's current $14.3 trillion in debt comes from the prior Bush administration gratuitous squandering of budget surpluses and an unthinkable plunge into unaffordable tax cuts while plunging into debt for two wars. That history of gross fiscal malfeasance must be reversed by fair burden-sharing. It's past time for Obama to join this cause. His re-election will depend on his staying this course.