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In the Nation's Interest

The President Must Lead

The verdict from the commentariat is in: It is great that expert panels have presented plans to reduce the nation’s unsustainable debt load; but those plans aren’t going anywhere.

Ezra Klein in the Washington Post emphasizes that the American people are nowhere near consensus on the issue. To Paul Krugman in the New York Times, the dim prospects are the fault of Republicans who want the current Administration to fail. David Brooks, also in the Times, sees fault on both sides: Republicans will not increase taxes under any circumstances, and the remaining left-extreme Democrats in Congress, after losing most of their centrists in this November’s elections, do not want to cede any authority to moderates. In short, there is no deal on Capitol Hill.

So is the nation to fall into an abyss of debt? Ruth Marcus, back at the Post, returns to those thrilling days of yesteryear when a President could make a difference. Her prescription recalls the fireside chats of Franklin Roosevelt – in the guise of Ross Perot, with charts – explaining to the American people why adult behavior could be a plus. I believe that Ms. Marcus has one part of the remedy, but it is the smaller part.

Another incarnation of Presidential leadership came through George H.W. Bush in 1990 and Bill Clinton in 1997. These Presidents summoned the leaders of the Congress to join with the Administration in bipartisan negotiation, with the end point to be an agreement to solve the budget problems of their day. Both negotiations worked.  President Bush the elder did not receive the credit that he deserved, because an economic recession masked the substantial good that he did – and then members of his own party weakened his reelection campaign.  He was replaced by President Clinton, who led a partisan – zero votes from the other party – effort to solve the remaining problem. It succeeded in budgetary terms – far beyond expectations – but cost his party its majority in the Congress. Still, a bipartisan run at the problem followed and became law, and the budget reached balance for the first time in 29 years.

Assuming that the current commission fails to achieve its required supermajority agreement – and of course we hope that it succeeds, but news to date is not convincing – the current President could follow in the footsteps of Presidents Bush the elder and Clinton. The fundamental step is to convene the leaders of both parties, in both Houses of Congress, to a negotiation on the budget problem under his leadership.

Per Ruth Marcus, the President should address the public to explain that the budget problem is close to a critical stage, and that the downside is dire. Given the reported attitudes of independent voters in the recent Congressional elections, that should be a feasible sell.  Then, he should publicly summon the Congressional leaders to solve that problem. If any members refuse to participate, then they will have identified themselves as unwilling to put the interests of the country first, and the President should make that clear.

With the leaders of the Congress in the room, the message is straightforward:  Success is imperative, or the well-being of the country will be put at unacceptable risk – a risk that by this point has been acknowledged by the leaders of both political parties. Agreement of a bipartisan 60-vote majority in the Senate, and a majority in the House, is required.  So partisan agendas simply will not work. All members need to understand that they will have to give.  With a divided Congress, each political party is well positioned to get some, but not all, of what it wants.

Then the President must lead. He must take the leaders of the Congress to the numbers, and show why major changes in both spending and tax policy are essential. He must make clear that the first party to walk away from the table takes the consequences of failure on its head.

Then the President must define the process.  The terms are well established in the precedents cited above.  Everything is on the table.  Nothing is decided until everything is decided.  Once agreement is struck, every participant takes ownership of, and responsibility for, every part.  There will be no political winners, and no political losers.  Once this major threat to the prosperity of the American people, and American leadership in the world, is removed, the two political parties can move on to fight over something else.

There is both risk and reward to the President. There is risk of failure. But if failure is caused by the intransigence of his political opponents, then the American people could well judge that the fault lies with them, not him. Even on the upside, if success comes through bipartisan agreement, then the President will not be able to name his terms, and the extreme wing of his party may be dissatisfied. But in this environment, showing leadership and avoiding a potential crisis could redound to the President’s benefit, especially with the independent voters whose decisions now are uncertain.

There are a few members of both political parties, both in office and in the ranks of the commentariat, who believe that the budget is not a problem, and that the sluggish economy is.  But right now, Washington is in gridlock over any steps to stimulate the economy. The only way to break that gridlock over stimulus is to show the way to solve the budget problem after the economy recovers. Economic stimulus should be a part of the negotiation over a longer-term budget and economic program.

The many pessimistic commentaries over recent budget-deficit plans are well founded.  Any extrapolation of Congressional behavior over the last ten years would lead to no prospect of responsible policymaking.  But that is why Presidential leadership is essential. It has worked before, and the well-being of the nation is at risk if it does not work again.  At the very least, it must be tried.

Commentaries are the views of the authors and do not necessarily represent policies of the Committee for Economic Development.