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Obama squandered chance to reach across aisle

By Keith Hennessey, Special to CNN
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STORY HIGHLIGHTS
  • Keith Hennessey says Obama squandered chance to reach across aisle in budget speech
  • He says Obama attacked Ryan plan that would put spending, deficit, taxes on sustainable path
  • Obama refused to change on funding medical research, clean energy, infrastructure, education
  • Hennessey: Obama was launching 2012 bid; poisoned well for bipartisan negotiations

Editor's note: Keith Hennessey is a fellow at the Hoover Institution, a public policy research center, teaches at Stanford Business School, and writes about American economic policy at KeithHennessey.com. He served as senior White House economic adviser to President George W. Bush.

(CNN) -- With his budget speech Wednesday President Obama had an opportunity to reach across the political aisle. He could have proposed a budget plan that focused on the long run, combined needed structural changes to the Big Three entitlement programs -- Social Security, Medicare, and Medicaid -- with the tax increases he wants.

He could have endorsed the proposals of his Fiscal Commission co-chairs, former Clinton Chief of Staff Erskine Bowles and former Republican Sen. Alan Simpson. Their proposal would reform these entitlements, capping government spending and eventually bringing it down to 21% of GDP.

He could have endorsed a bipartisan Medicare reform proposal. He could have proposed a specific Social Security reform proposal to make that program permanently sustainable. He could have taken a political risk for the good of the nation.

The president instead opened his remarks by attacking the only budget plan that would actually solve America's long-term fiscal problems, that offered by House Budget Committee Chairman Paul Ryan.

That budget contains a Medicare reform plan, makes Medicaid spending sustainable, would cause government debt to shrink relative to the economy beginning three years from now, and would put America's government spending, deficits and taxes on a permanently sustainable path.

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The president attacked the Ryan plan and stressed what he will not do: He will not cut spending in medical research, or clean energy technology, or roads or airports or broadband access or education or job training. He will not allow changes to the Affordable Health Care for America Act, which added two huge and unsustainable new entitlements on top of the already unaffordable promises made by past politicians.

If your goal is to foster a bipartisan discussion, you look for something constructive to say about the ideas of your negotiating partners. You disagree with their proposals without attacking their motives. You create a constructive environment that encourages politicians on both sides to take political risks in search of principled bipartisan compromise.

Instead, the president threw down the gauntlet. He made it clear that if you support the Ryan budget, he will attack you. He will accuse you of failing "to keep the promise we've made to care for our seniors," despite the explicit commitment in the Ryan budget that it would only affect future retirees.

The president offered two specific new spending cut proposals. He proposed to cut the amount the government pays for prescription drugs in Medicare and Medicaid. He proposed to crack down on states that gimmick their Medicaid accounting.

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Every other spending cut he proposed is a mirage. His Fiscal Commission proposed to "replace the phantom savings from scheduled Medicare reimbursement cuts that will never materialize ... with real, common-sense reforms." The president instead proposed to increase those very same phantom savings and he claims hundreds of billions of dollars of deficit reduction from doing so.

He committed to cut defense spending but gave no specifics. He said he would "conduct a fundamental review of America's missions, capabilities, and our role in a changing world," one month after committing American military forces to a third front, in Libya. It is dangerous to simultaneously expand the mission of America's military and cut their resources.

And he keeps returning to taxing the rich. But while the tax policy differences between the parties are real and significant, they are small compared to the differences on entitlement spending.

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The president's budget speech was an effective way to launch the 2012 campaign. He has set up a debate about the future of fiscal policy and the role of government.

He has positioned himself to attack those who propose an alternative -- and, in my view, more responsible -- fiscal path for America. He has electrified the third rail and now dares the other party to grab hold.

He has poisoned the well for bipartisan negotiations, killing any chance of a grand budget bargain in the next 18 months. With a single speech he has relegated America to two more years of partisan budgetary stalemate, as we drift closer and closer to fiscal oblivion.

The opinions expressed in this commentary are solely those of Keith Hennessey.

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