Throughout his presidency, President Obama has advanced the idea that the nation’s mounting debt problem could be solved by “modest adjustments” to entitlement programs and asking wealthy taxpayers to pay just a little bit more. But in Senate testimony today, Congressional Budget Office director Doug Elmendorf communicated that it wasn’t quite that easy.
Under questioning from Sen. Ron Johnson, who highlighted the dire state of Medicare and Social Security finances, Elmendorf stated that putting the budget on a sustainable path would require major reforms to entitlement programs or massive tax increases that would hit the middle class.
“It’s very difficult Senator, if you look at our projections, to see how one could put the budget ultimately on a sustainable path without making significant changes in either of those large benefit programs or in taxes paid by a broad cross-section of Americans,” Elmendorf said at a hearing of the Senate Budget Committee.
(Video of the exchange above.)
It’s worth keeping this in mind as Obama prepares to deliver his State of the Union speech. In budget battles, Obama has consistently tried to present Americans with a choice between Republicans who want to make draconian cuts to government programs that people depend upon and a more reasonable approach in which only a few small tweaks to entitlements and slightly higher taxes on the rich will be sufficient to get the debt under control. But the reality is that if Obama doesn’t want to allow significant changes to entitlements, then he’s going to have to support higher taxes on all Americans — not just the rich.
As I’ve noted previously, the CBO projections assume that revenue as a share of the economy is already projected to exceed historical levels over the next decade, and yet the debt trajectory is still considered unsustainable. So if Obama wants to leave entitlements largely intact, he’s going to have to acknowledge the need for large scale middle class tax hikes.
If he were to do that, then there could have an honest budget debate in which Americans could choose whether they want to pay significantly higher taxes to support a burgeoning welfare state or whether they want to bring down spending to match the historical tax burden.