Obama vows swift results on deficit, border if he wins

President Barack Obama, facing criticism that he has failed to offer a vision for a potential second term, has begun sketching out his agenda with greater specificity in recent days, including a pledge to solve the nation's intractable budget problems within "the first six months."

In an interview made public Wednesday, Obama said he would pursue a "grand bargain" with Republicans to tame the national debt and would quickly follow that with a push to overhaul the nation's immigration laws.

With less than two weeks until Election Day, Obama chose to highlight two issues that have bedeviled him during his presidency: the debt, which has soared past $16 trillion on his watch, and immigration legislation, which never got off the launching pad over the past three years. Both are politically significant, with the debt a concern among independent voters and immigration important to the Hispanics who could decide whether Obama carries swing states such as Colorado and Nevada.

The interview, conducted Tuesday with the editor and publisher of the Des Moines Register, the largest newspaper in Iowa, also marked an unusual moment in the president's dealings with the news media.

Obama had initially insisted that the exchange, which he conducted by phone from a stop in Florida, be off the record. Then on Wednesday, his campaign abruptly decided to release a transcript after the newspaper's editor, Rick Green, wrote a blog post calling the interview terms a "disservice" to voters. Obama is seeking the influential paper's endorsement.

The transcript gave a surprising glimpse of Obama as political pundit, gaming out timetables and calculations for his dealings with Capitol Hill Republicans. He predicted, for instance, that an expectedly poor showing by challenger Mitt Romney among Hispanics would put pressure on GOP lawmakers to ease their opposition to an immigration overhaul that offers a path to citizenship for illegal immigrants.

"Since this is off the record, I will just be very blunt," Obama said at one point. "Should I win a second term, a big reason I will win a second term is because the Republican nominee and the Republican Party have so alienated the fastest-growing demographic group in the country, the Latino community."

With polls in swing states showing the race tightening, Obama appears to be shifting away from a strategy dominated by attacks on his opponent to one that includes a rationale for skeptical voters to re-elect him.

The Obama campaign is distributing brochures that repackage his proposals to hire more teachers, promote manufacturing and raise taxes on the wealthy.

Aides said the push to define the president's second term also includes direct mail and a new 60-second TV ad featuring Obama looking into the camera and laying out his views on manufacturing, energy and other issues. "Read my plan," he says.

At the top of the priority list: a promise to forge a bipartisan compromise that reduces rampant government borrowing and makes long-postponed decisions about taxes and spending. In the interview, Obama called a budget deal "one of the best things we can do for the economy."

"We're going to be in a position where, I believe, in the first six months, we are going to solve that big piece of business," Obama said. "It will probably be messy. It won't be pleasant. But I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I've been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in taxes, and work to reduce the costs of our health-care programs."

Obama offered no details of how he would approach negotiations with congressional Republicans. But with Washington facing a January deadline to undo more than $500 billion in automatic tax hikes and spending cuts next year, Obama said, "There's going to be a forcing mechanism to deal with what is the central ideological argument in Washington right now, and that is: How much government do we have, and how do we pay for it?"

Republicans reacted with a yawn to the news that Obama is ready to reengage on a grand bargain if he wins the election.

They noted that his proposal for a cuts-to-taxes ratio of $2.50 to $1, embodied in his most recent budget request, was roundly rejected in both the House and Senate.

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Cutting the Deficit, Compassionately - Economic View

Thanks to former President George W. Bush — remember the compassionate conservative? — I have a good name for the fundamental principle that should guide the Democratic alternative: compassionate deficit reduction. The essence is to cut the deficit in a way that does as little harm as possible to people, jobs and economic opportunity. This principle was implicit in much of what President Obama proposed in his 2013 budget, and in what he said about the deficit at the Democratic convention on Thursday. But embracing it more explicitly would improve the substance of the president’s plan, and make it easier to explain to voters.

The first tenet is to go slowly. Investors are willing to lend to the United States at the lowest interest rates in our history. That gives us the ability to cut the deficit on our own timetable. We should pass a comprehensive, aggressive deficit reduction plan as soon as possible, but the actual spending cuts and tax increases should be phased in as the economy recovers.

Why is this the compassionate approach? Because immediate, extreme austerity would plunge us back into recession. The Congressional Budget Office set off alarm bells a few weeks ago when it said that going over the fiscal cliff — a reference to the nearly $500 billion of automatic fiscal contraction scheduled for the start of 2013 — would cause a rapid rise in unemployment. Well, duh.

A crude rule of thumb is that every $100 billion of deficit reduction will cost close to a million jobs in the near term. If that isn’t a reason to move gradually, what is? But if you need another, just look at Europe.

A concrete way to adjust gradually is to pair serious long-run deficit reduction measures with equally serious, near-term jobs measures — like a sizable short-run infrastructure program and a one-year continuation of the payroll tax cut for working families first passed in 2010. President Obama advocated both in his proposed American Jobs Act last September.

Even better would be to give businesses increasing employment a tax credit so large they couldn’t help but notice it, and state and local governments a round of aid generous enough to finally stop the hemorrhaging of teacher jobs and essential government services.

A second feature of compassionate deficit reduction is well-designed tax reform that raises at least some additional revenue. Our budget problems are so large that solving them entirely through spending cuts would devastate the social safety net and slash investments essential for long-run growth and economic opportunity. So revenue increases must be part of the package.

President Obama has repeatedly urged Congress to let the Bush tax cuts expire for those earning more than $250,000 a year. Increasing rates on top earners is an obvious way to raise revenue from those who can afford it most.

Many experts also recommend raising revenue by lowering tax expenditures — the roughly $1 trillion of deductions, credits and loopholes in the income tax code. Cutting tax expenditures would probably have fewer undesirable incentive effects than raising marginal tax rates. But it’s important to move carefully. Many tax expenditures, like the mortgage interest deduction and the tuition credit, go to middle-class families. Cutting only those expenditures wouldn’t be compassionate: it would shift tax burdens toward ordinary families already struggling to make ends meet.

One big tax expenditure benefiting the wealthy is the low tax rate on capital gains and dividends. The tax cuts of 2003 lowered the top rate on this income to 15 percent, far below the 35 percent top rate on other income. Compassionate deficit reduction requires a willingness to raise this preferential rate.

Government health care spending is a major cause of our terrifying long-run budget outlook. Any effective deficit plan has to slow that spending growth. But a compassionate plan would minimize risk to people, especially the most vulnerable.

The central question is whether Medicare and Medicaid should remain entitlement programs guaranteeing a certain amount of care, as Democrats believe, or become defined contribution programs in which federal spending is capped, as Republicans suggest.

Democrats have been forceful in explaining that if the federal contribution is limited and competition doesn’t magically slow costs commensurately, individuals and states will have to pay more. With Medicare, if individuals couldn’t pay the extra cost, they’d have to settle for less complete coverage and fewer benefits. With Medicaid, if states weren’t willing to pay the extra cost, they’d have to throw people off the rolls.

But Democrats need to explain their own plans for slowing government health care spending. To start with, they shouldn’t be defensive about having found $716 billion of Medicare savings as part of the health care reform legislation. They should explain, as former President Bill Clinton did in his speech on Wednesday, that these were reasonable changes that reduced overpayments to providers. They should ask Mitt Romney, who has vowed to roll back these reforms, why he wants to waste taxpayers’ money.

Moreover, Democrats should explain that compassionate deficit reduction will involve more such reforms. Fortunately, there is much inefficiency in the current system, so it should be possible to cut costs without lowering benefits. But if we can’t save enough money by reducing waste and finding better ways to provide care, we might have to consider more painful choices.

Making the wealthy pay a larger share of their Medicare costs, through further means-testing of benefits, would be one way to go. Gradually raising the Medicare eligibility age would be another. That may not sound like a winning message until you contrast it with the Republican plan, which trusts private insurers to decide how to cut costs.

Dealing with the deficit will require more than increasing revenue and reforming health care programs. We’ll also have to cut other spending. Compassionate deficit reduction requires that we choose carefully what to trim.

Spending that protects children, such as money for school lunches and vaccinations, must be maintained. So should assistance for workers displaced by international trade and for veterans struggling to recover from combat wounds.

Democrats shouldn’t be ashamed to advocate actually increasing spending that encourages opportunity and long-run growth. Aid for effective public education and Pell grants that help low-income students go to college aren’t luxuries — they are the building blocks of tomorrow’s labor force and the foundation of the American dream. And spending on infrastructure and basic scientific research is essential for the growth of productivity and standards of living.

BUT to make support for good spending credible, compassionate deficit reducers should be specific about what they would cut. Personally, I’d start with agricultural price supports and subsidized crop insurance programs that mainly benefit large commercial farmers. High-speed rail might be next. (Sorry, Mr. Vice President.) And if the defense secretary says that there is $487 billion that can be safely cut from the Pentagon’s budget over the next 10 years, we should listen to him.

Honest talk about the deficit is risky. Voters are more enthusiastic about the abstract notion of deficit reduction than about the painful details of accomplishing it. But deficit reduction is coming, and this election will most likely determine how it’s done. Democrats owe it to the American people to detail their more compassionate approach so that voters can make an informed choice.

Christina D. Romer is an economics professor at the University of California, Berkeley, and was the chairwoman of President Obama’s Council of Economic Advisers.

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Cracks in GOP promise of no new taxes for deficit cuts? (The Christian Science Monitor)

Washington – As Congress hurtles toward a self-imposed deadline to cut at least $1.2 trillion from deficits during the next 10 years, conservative lawmakers face tough choices on whether to keep their pledge to never raise taxes.

All six GOP members of the Joint Committee on Deficit Reduction have signed the taxpayer protection pledge, launched in 1986 by Americans for Tax Reform (ATR), an antitax group. All but six House Republicans and seven US senators have also signed.

The pledge commits lawmakers to opposing any hikes in tax rates. It also opposes cutting tax breaks or loopholes, unless they are entirely offset by spending cuts or other tax breaks. The idea is to ensure that no new money goes to the federal government but instead remains in the wallets of taxpayers.

But that opposition to any net tax increase is emerging as a major obstacle to the deficit "super committee" reaching a deal by its Nov. 23 deadline. Democrats on the panel are committed to a “balanced” approach to deficit reduction, which includes increases to federal revenue, such as tax hikes on the highest-income Americans.

RECOMMENDED: Who's who on the deficit 'super committee'

Now there are signs that, even for some prominent conservatives, the constraints of the ATR pledge are beginning to chafe.

Rep. Paul Ryan (R) of Wisconsin, who chairs the House Budget Committee, lately is avoiding being forced to give a yes-or-no answer to questions on tax hikes. All GOP presidential hopefuls responded in a recent debate that they would oppose revenue increases as part of a deficit-reduction deal, even if the ratio was $1 in tax hikes for every $10 in spending cuts.

“I think that was more of a gotcha question and trying to get people to look like they violated some pledge they may have taken,” he said during an interview with National Public Radio’s “Morning Edition” on Friday. “I’m not going to play this game.”

“I believe you can get higher revenues through tax reform and economic growth, and I think that’s the way to do it, because you don’t want to compromise job creation,” he said.

Rep. Buck McKeon (R) of California, who chairs the House Armed Services Committee, is lobbying his colleagues hard to not accept further defense cuts as part of a deficit compromise. But he doesn’t want to be forced to choose between defense spending and a tax hike.

“I don’t want to get to that point,â€

Rep. Jeff Flake (R) of Arizona, who has signed the pledge, has suggested there is some wiggle room. “Some [conservatives] won’t even let you get rid of a tax deduction or tax expenditure, unless it matches up with a tax cut. I’m not one of those.”

“If you can get rid of something as bad as the ethanol subsidy, I don’t think we should feel compelled to find a corresponding tax cut,” he added.

ATR President Grover Norquist calls adherence to the pledge a principled stance and a commitment to voters, not to ATR or to himself. He predicts it will not break down in the heat of negotiations to reach a deal.

“All of the guys on that committee have taken the pledge and understand it,” he says. “Everything I’m hearing is that we’re fine.”

An anti-Norquist pledge petition, signed by more than 11,000 online responders, calls on "Gridlock Grover" to affirm that the constitutional oath of public officials should trump ATR's no-tax pledge. "Over the past several months, politicians across the political spectrum have argued that your demand for ideological purity and your strong-arm enforcement tactics are paralyzing Congress and preventing Congress from solving the problems of the American people," reads the petition sponsored by the Constitutional Accountability Center in Washington.

On Tuesday, Sen. Max Baucus (D) of Montana, chair of the Senate Finance Committee and a member of the deficit panel, proposed more than $1 trillion in tax increases in a $3 trillion deficit-reduction plan. GOP leaders on and off the panel quickly dismissed it.

“Democrats come up with phony proposals like the $3 trillion [plan] to mask tax increases,” says Mr. Norquist. “Democrats want to raise taxes and they don’t want to cut spending. Republicans don’t want to raise taxes, but they want to cut spending. That’s exactly what we want the narrative to be between now and the next election cycle.”

RECOMMENDED: Who's who on the deficit 'super committee'

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