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Will President Obama Use the State of the Union Address to Go the Distance on Federal Spending?

Posted By Kathryn Nix On January 25, 2011 @ 5:17 pm In Economics | Comments Disabled

During last year’s State of the Union address [1], President Obama emphasized the need to restore fiscal responsibility in Washington. The federal government racked up a $1.3 trillion deficit in 2010, and the long-term fiscal outlook is even worse [2]. While the average historical deficit stands at 2.9 percent of gross domestic product (GDP), by 2050, deficits will have surpassed 20 percent of GDP and will continue to climb.

To tame the beast, Congress and the President will need to work together to reduce runaway spending, the main source of budget shortfalls. Several attempts are already underway to control discretionary spending: House leadership is in the midst of preparing a rescissions package worth $60 billion, and last week, the House Republican Study Committee unveiled a spending reduction plan [3] that would result in $2.5 trillion in savings over the next decade.

This is a good start, but to have a real impact, Congress must tackle entitlement spending on Medicare, Medicaid, and Social Security, which represent trillions in unfunded promises. In the year since the President’s last State of the Union address, increased attention has been given this issue. Representative Paul Ryan (R–WI) re-introduced his Roadmap for America’s Future, a plan to eliminate federal deficits and transform entitlement programs and the health care system at large [4]. The President also created the 18-member, bipartisan National Commission on Fiscal Responsibility and Reform. The commission offered a plan to reduce the deficit in December, and though the proposal was flawed, it included several promising ideas to address the nation’s fiscal dilemma.

Some members of the commission also offered alternative proposals. The Bipartisan Policy Center’s Debt Reduction Task Force, which was co-chaired by Alice Rivlin, a member of the commission, and former Senator Pete Domenici (R–NM), offered its own plan to reduce the deficit. And Rivlin and Ryan co-authored yet another plan to reform Medicare and Medicaid, reducing the programs’ unfunded promises and giving states and patients greater flexibility to make health care decisions.

According to the White House, tonight President Obama will propose a budget freeze and an earmark ban to signal a commitment to deficit reduction. These are good ideas, but they are staggeringly small. If the President is serious about meaningful change, he should use tonight’s State of the Union Address to advance reform to put entitlement programs on stable footing. One example that has received support from both sides of the aisle is the deficit commission’s proposal to increase the solvency of Social Security [5] by raising the retirement age and reducing benefits.

According to Maya MacGuineas [5], president of the Committee for a Responsible Federal Budget, President Obama “has to go first and he has to be specific. He has to pivot to something hard.” The State of the Union address is the perfect chance for the President to build on the last year’s momentum to ensure that 2011 will bring the needed changes to reduce deficit spending.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/01/25/will-president-obama-use-the-state-of-the-union-address-to-go-the-distance-on-federal-spending/

URLs in this post:

[1] last year’s State of the Union address: http://www.foundry.org/2010/01/27/reaction-roundup-heritage-responds-to-the-state-of-the-union

[2] the long-term fiscal outlook is even worse: http://www.heritage.org/budgetchartbook

[3] spending reduction plan: http://www.foundry.org/2011/01/20/what-do-you-call-2-5-trillion-in-spending-cuts-a-good-start

[4] a plan to eliminate federal deficits and transform entitlement programs and the health care system at large: http://www.heritage.org/Research/Reports/2010/12/The-Future-of-Health-Care-Reform-Paul-Ryan-s-Roadmap-and-Its-Critics

[5] increase the solvency of Social Security: http://www.washingtonpost.com/wp-dyn/content/article/2011/01/24/AR2011012403472_pf.html

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