Why left should seek a fiscal deal

November 8th, 2012

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This piece was originally featured on Reuters.

“I am looking forward to reaching out,” President Barack Obama said Tuesday night after he had won reelection, “and working with leaders of both parties to meet the challenges we can only solve together.”

The progressive community must understand this and put aside its rigidity to help him meet this goal. As Obama also said early Wednesday morning, “We’ve got more work to do.”

Yet a network of liberal groups [2], on Thursday, plan to demand a national day of action [3] against a balanced, grand bargain that could pull the nation back from the fiscal cliff it faces. The beef of this progressive coalition is that a real budget deal would almost certainly cut Medicare spending and may possibly include a proposal to make Social Security solvent through the century.

The president and members of Congress must now begin working to find a solution to the scheduled tax increases and spending cuts that form the fiscal cliff. This is the wrong time to draw ideological lines in the sand.

Both the right’s Tea Party-driven campaign against any new revenue and the left’s pledges to circumvent any changes to Social Security and Medicare could keep us from a balanced deal. This could doom our ability to address the fiscal cliff and secure our nation’s future.

The demands issued Wednesday by this coalition of the left to leave Social Security and Medicare on autopilot could ensure that the United States faces chronic deficits for decades. They guarantee the insolvency of the same critical safety net programs that progressives spent a century trying to create.

How we resolve the scheduled tax and spending changes will set the tone for the economy and the next Congress. A balanced deal that puts the nation on a glide path to fiscal probity would restore confidence in the economy and could lead to significant middle-class job growth. Failure to reach a deal, however, means that Congress will likely spend the next two years bickering — and getting little done on other progressive priorities like immigration, energy and education.

But there are other solid reasons why the same groups that now want the president to stand down on a balanced deal should instead embrace one.

First, progressives have toiled for a century to build and perfect an adequate safety net. With passage of the Affordable Care Act in 2010, this mission is complete. Their challenge now is to maintain it as we approach the most consequential demographic aging in U.S. history.

Any serious approach to fixing the safety net must include a balance of measures that make the programs healthy and solvent—new revenue, modest reductions in benefits to some recipients, and a commitment to working-class people that we will not raise payroll taxes on them in the future.

Some on the left contend that Social Security and Medicare don’t contribute to the deficit and that the programs are solvent today. Yet in 2008, Medicare [4] began to spend more than it takes in. Social Security [5] will do the same in 2015.

The picture only gets worse in the next two decades. Retiring baby boomers will bankrupt Medicare in 2024 and Social Security nine years later. As both programs spend down their trust funds, they will add to the deficit and ultimately become insolvent.

Second, taxes alone can’t solve the problem. New tax revenue clearly needs to be part of the solution — as the voters said Tuesday. But raising taxes only on the wealthy won’t deliver the revenue needed to solve long-term deficits and maintain the safety net.

Even if taxes went well beyond Clinton-era levels, and we pushed top rates to 50 percent and capital gains near 40 percent, deficits in 2040 would exceed $3 trillion [6] in today’s dollars on our current spending path.

Third, this is the best moment to deal with these pillars of the social safety net. Many on the left suggest we should wait to address Social Security and Medicare with a different president and Congress. Yet there’s nothing more risky for these two vital programs.

Social Security and Medicare need fixing. The only question is whether it is done by a Democratic president and Senate who care deeply about these programs — or by future leaders who may envision privatization, vouchers or a pure benefits-cut solution to the problem.

Without a serious fix, Social Security will become social insecurity, and Medicare will become pinched. We hope the progressive community can put aside ideologies of the past and join the president in seeking a responsible and balanced long-term fix to the fiscal cliff.

It will be good for progressives, good for the middle class and good for future retirees.