History yawns at budget deals
The prevailing narrative in Washington suggests that President Barack Obama's legacy depends on forging a "grand bargain" with Republicans that cuts the projected growth of Social Security and Medicare in exchange for more tax revenue.
Former White House fiscal commission co-chair Alan Simpson said it bluntly last month: "If he doesn't get a handle on the entitlements and the solvency of Social Security … the scorecard in years to come was, he failed." Slate's John Dickerson said that a "grand budget deal" would "light up the history books." TIME's Mark Halperin similarly asserted, "a president with a great sense of history and an eye on the clock knows it is now or never … The elusive grand bargain now seems in reach."
There's one problem with such claims: History yawns at budget deals.
Ronald Reagan is heralded for winning the Cold War, not for the Tax Reform Act of 1986. Lyndon Johnson is lionized for the Civil Rights Act and Medicare, not for salvaging John F. Kennedy's stalled tax cut proposal. Dwight Eisenhower is remembered for building the interstate highway system. Few recall his successful wrangling with a Democratic Congress to reduce spending and balance the budget in 1959.
There is a reason why budget deals rarely merit legacy status: They don't stick. An accomplishment can't be a legacy if it isn't still around. We are still driving on Eisenhower's highways, vacationing in Teddy Roosevelt's national parks, and retiring on Franklin Roosevelt's Social Security and Lyndon Johnson's Medicare. We are still living in a freer world because Harry Truman had a plan to contain Communism and Reagan (through a stranger set of circumstances than most people realize) finished the job. We are still living in a fairer society because Teddy Roosevelt busted the trusts, Woodrow Wilson established the progressive income tax, and Franklin Roosevelt codified labor rights. We are still living in a diverse society because Truman desegregated the military, Eisenhower helped desegregate the schools, and Johnson broadly outlawed racial discrimination.
But budget deals? They come and go.
Consider Reagan's 1986 tax reform. Pundits of a certain age, nostalgic for bipartisanship, wistfully cite the tale of Reagan's laboring alongside Democrats like Speaker Tip O'Neill and Sen. Bill Bradley to flatten and simplify the code. But what has happened since?
The centerpiece of the law, a top income tax rate of 28 percent, was partially reversed by his next two successors, George H. W. Bush and Bill Clinton, then partially returned by George W. Bush, and, just recently, partially reversed once again by Obama. That rate now rests at 40 percent. And that doesn't count Obama's other new surcharges on the wealthy, making the tax code the most progressive since Reagan's inaugural. Furthermore, there have been more than 15,000 changes in tax law since 1986, unraveling Reagan's attempt at simplification.
Or take Bill Clinton's budget surpluses. While they make for great Democratic talking points, Clinton's obituaries are unlikely to be headlined: "Bill Clinton, President Who Balanced Budgets." Why? Because that surplus barely lasted two seconds before George W. Bush spent it on tax cuts for the rich. As one former Clinton aide lamented, "what we turned out to have done, in the end, was to enable George W. Bush's right-wing class war." The swing from surplus to deficit was particularly dramatic from Clinton to Bush. But other presidents who left office with hard-fought surpluses — such as Johnson and Eisenhower — are not lauded in history for their ability to line up a budget ledger. Their surpluses didn't last either.
Might it be grander than a budget surplus for Obama to save Social Security and Medicare from insolvency? Putting aside for the moment the debate over whether either program is actually in crisis, remember this: History shrugs at the housekeeping task of maintaining what we already have.
Reagan is not remembered as "the man who saved Social Security," and Obama is being pressed to do basically what Reagan did in 1983: extend the solvency of Social Security by increasing the retirement age, taxing the wealthy, and futzing with the cost-of-living adjustment. In Lou Cannon's definitive biography of Reagan's presidential years, this achievement received about a paragraph, and was dismissively characterized as "tinkering at the margins."
Reagan may have helped maintain Social Security. But it's Franklin Roosevelt who is remembered for creating Social Security. Of course, those like Alan Simpson trying to stoke mass panic about the state of Social Security and Medicare will argue that failing to strike a grand bargain will lead to their collapse, leaving Obama with a Calvin Coolidge–esque legacy, condemned for sleeping on the job while disaster loomed.
But whatever your opinion is regarding the necessity to reform our entitlement programs, no one can plausibly argue that they are imminently doomed. The most recent Social Security Trustees report offers an "intermediate" projection in which the program's reserves are depleted in 20 years. That would not bankrupt Social Security, despite what you often hear. It just means the program would be solely reliant on payroll taxes from current workers, which would only generate enough revenue to pay out 75 percent of promised retiree benefits.
And that's only the "intermediate" projection. They also make a "low-cost" projection — in which unemployment is lower and interest rates are higher, among other things — where Social Security's reserves are never depleted in the next 75 years.
You may not want to bet all your money on the most optimistic scenario, but the trustees have a record of being "overly pessimistic," according to The New York Times Magazine's Roger Lowenstein. Besides, these projections bounce around. During the past two decades, the intermediate projection has pegged the year of depletion between 2029 and 2042. It's at the low end now because of the aftermath of the 2008 market crash and the subsequent Great Recession. But that could change. Even it if doesn't, doomsday isn't tomorrow.
The argument of the Social Security reformers is: better to gradually phase in benefit cuts than to abruptly slash them 20 years from now. The argument of the Social Security protectors is: we don't know that we'll have to slash benefits 20 years from now, and we have time to find out. Maybe you think the reformers have the better argument, but if Obama lets one of his successors make that call, his legacy won't mind.
On Medicare, according to last year's trustees report, Obama has already extended the solvency of its trust fund into 2024. That's thanks to one of the legacy achievements Obama has already banked: ObamaCare.
More reforms will be likely needed to make our overall health-care system cost-efficient and further reduce Medicare spending, but ObamaCare is packed with cost-control experiments that haven't been fully implemented yet. There is time to see how they work and to learn as we go.
Presidential legacies are built on achievements that last. Major new programs. Grand public works projects. Equal rights advancements. Transformational foreign policy breakthroughs. Obama has already pocketed a number of these. Creating ObamaCare. Repealing Don't Ask Don't Tell. Bagging bin Laden.
No doubt, he wants more. He's close on landmark immigration reform. He's farther away on climate — an actual imminent crisis — though it's clearly in his sights. But a grand budget deal? In Obama's own words to ABC News, if he doesn't get one, "that won't create a crisis. It just means that we will have missed an opportunity."
Obama may want it. He may even get it. But he knows he doesn't need it.
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