TO have any effect, though, the president can’t just say he is ready for “tough” decisions. He has to lead with his chin and put a concrete, comprehensive package on the table, encompassing three areas. First, new investments that would combine immediate jobs in infrastructure with some long-term growth-enablers like a massive build-out in the nation’s high-speed broadband capabilities. That would have to be married with a long-term fiscal restructuring, written into law, that slows the growth of both Social Security and Medicare entitlements, along with individual and corporate tax reform. Obama has hinted at his willingness to do all of these. They should be agreed upon in 2013 and phased in gradually, starting in 2014. There are a lot of good bipartisan packages out there to choose from; we just need one that puts us on a trajectory to shrink our ratio of debt to gross domestic product over time. Otherwise, we will have little in reserve to fight the next economic crisis or 9/11 or Hurricane Sandy.
Our choice today is not “austerity” versus “no austerity.” That is a straw man argument offered by both extremes. It’s about whether we phase in — in the least painful way possible — a long-term plan that balances our need to protect the most vulnerable in this generation while funding the most opportunities for the next generation, and still creating growth. We can’t protect both generations in full anymore, but we must not sacrifice one for the other — favoring nursing homes over nursery schools — and that’s what we’re on track to do.
A Grand Bargain now, rather than a meat-ax sequester, would offer stability for the long-term and maybe even a boost for the short term.