Deal sets stage for the real budget debate

The country's big remaining task in achieving fiscal health is the completion of health-care reform.

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President Barack Obama talks to the nation about the debt-limit talks.

The country's big remaining task in achieving fiscal health is the completion of health-care reform.

There’s nothing like deadline to produce a deal: The president and congressional leaders reached an agreement over the weekend to increase the nation’s debt limit, cut federal spending, and create a powerful committee charged with finding even more budget cuts.

The Era of Government Contraction will likely be set in law, except for one thing. The fight about the role of government in American society is not over.

Here is how President Barack Obama on Sunday night described the bipartisan deal designed to limit the nation's debt and avoid default:

“The first part of this agreement will cut about $1 trillion in spending over the next 10 years — cuts that both parties had agreed to early on in this process.  The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president — but at a level that still allows us to make job-creating investments in things like education and research.  We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.” 

But let’s be clear about what this deal really means. First, domestic (and now military) government programs will shrink over the next decade. Second, that contraction will be terrible for our economy because the already-high unemployment level will only grow higher as government-sector layoffs increase and services are cut. This will be a painful process for ordinary Americans. And, third, and most important, this “deal” does not end the fight about the future of the country. Congress must still debate (bicker, really) about:

  • Next year’s federal spending through the budget process;

  • The role of taxes in this current deal;

  • And, the coming expiration of the Bush tax cuts next year. (I should mention: President Obama has a $1 trillion trump card in the tax debate. If Congress does nothing, if he does nothing, then the tax cuts expire and return to levels when Bill Clinton was president.)

A slide presentation from Speaker of the House John Boehner to members of the Republican Caucus says the deal would “cut and cap discretionary spending immediately, saving $917 billion over 10 years.” And that’s before the super-charged joint committee comes up with even more painful spending reductions.

Those cuts will be dramatic in their impact on state government budgets, tribal government budgets, and generally, for programs that most people rely on for services, such as school funding, Medicaid and children’s health insurance. We will feel the sting from the Era of Government Contraction; its impacts will be significant and ongoing.

But government will also continue to grow. Why? Simple demographics. The largest generation in history, the baby boomers, has already started to turn 65 years old and is eligible for Medicare (and in many cases, Medicaid). More than 10,000 people a day turn 65, a trend that will continue for nearly the next 20 years. So growth is inevitable. Even with all of the entitlement cuts on the table.

But this is why this debate matters. The sheer size of the baby boom, combined with a longer life expectancy for all Americans, makes it impossible to continue on the path we’re on.

We haven’t figured out yet how to talk about this issue. Demographics weren’t on the agenda, let alone Topic A. Republicans blamed the growth of government on Obama (while most of government spending is Medicare, Medicaid, and children’s health insurance), just as Democrats countered with rhetoric to protect current seniors.

Domestic spending, which gets most of the attention, and has a disproportionate impact on Indian Country and programs that matter to poor people is pretty much a distraction. You could zero out all domestic spending, eliminating the Bureau of Indian Affairs as some in Washington have proposed, and it would not fix the problem.

So we need to keep the argument desk open. We can move beyond the debt ceiling and get back to the really important debate: finishing what we started with health care reform. We need to lower the cost of health care because that’s the only way to fix our demographic imbalance. The best way to cut health care costs is to manage our expectations — and be certain that every American has access to care.

We’ve had some difficult, intense ideological fights over the past couple of years. It would be easy to sigh and say we’ve fixed health care and our debt problems. But the real debate is just beginning.


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