Obama Win or Loss, Deficit Fix Will Still Require a Grand Bargain

Democrats won't give in to entitlement cuts without tax hikes on the rich.

By + More

Ross Douthat rightly calls out President Obama for proposing a bevy of costly new populist microinitiatives in his State of the Union address.

Douthat also rebukes Obama for failing to put on the table a concrete plan to reform entitlements and the tax code:

[T]he rhetoric of fairness is not a substitute for a long-term deficit reduction plan, a real blueprint for overhauling the entitlement system, or a comprehensive tax reform—none of which this White House will be offering, apparently, in the 2012 campaign.

[ Read State of the Union trivia and history.]

If you asked the White House, I'm sure you'd hear some version of this response: "Been there, tried that."

In his speech, Obama alluded to the collapse of debt-ceiling negotiations:

As I told the Speaker this summer, I'm prepared to make more reforms that rein in the long-term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors. But in return, we need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes.

[ Read Mort Zuckerman: Social Security Has Reached a Tipping Point]

In other words, the terms of the Grand Bargain—entitlement cuts in exchange for higher taxes on the wealthy—remain the crux of our paralyzed deficit-reduction politics. Even if Obama loses in November, Democrats in Congress are going to continue insisting on those terms. And with the power of the routine filibuster on their side, as well as public sentiment in favor of hiking taxes on the rich, Democrats won't need control of the White House or either house of Congress in order to hold out for the Grand Bargain.

For the next several months, both sides are going to ignore this reality. But come January 20, 2013, it will rear its head once again.