Line In the Sand

President Obama made it plain on Wednesday: No more Mr. Nice Guy.

In his speech on deficit reduction, Obama laid out his own plan to save $4 trillion over twelve years. He made it clear that he has no intention of going along with the budget plan laid out by House Budget Committee Chairman Paul Ryan (R-WI) that guts Medicare and Medicaid to the point of irrelevance, or, to where Nancy Pelosi is.

Obama wants to repeal the Bush tax cuts on families with annual incomes of $250,000 or more (and much more) once and for all, as well of cut spending on federal pensions, agricultural subsidies, and yes, the Pentagon - although he stopped short of zeroing out war spending. Medicare and Medicaid spending would be reduced based on per beneficiary growth in spending in accordance with the per capita growth of gross domestic product, with a savings of $480 billion by 2023. Whatever. That still sounds like a cut, but at least it doesn't sound like a gut.

Naturally, his tax increase proposal was greeted by the Republicans - Ryan, Speaker Boehner, Senator McConnell - with outright hostility. Once again, they painted a tax increase on the rich as a tax increase on all, even though the wealthiest Americans have made out like bandits at the expense of everyone else for the past thirty years. Rush Limbaugh bemoaned any plan that would tax those who, as he put it, create wealth earned by the time and money they spent building their businesses and hiring workers. This is the same "trickle-down" theory that has been used repeatedly to justify tax breaks for the rich, and it obviously hasn't worked for the traveling salesmen who listen to Limbaugh's show - although it's worked very well for Limbaugh. When Republicans talk about growing the economy and getting more tax revenues from creating more jobs, it means one thing and one thing only - they want to tax work, not wealth.

This certainly draws a line in the sand for the 2012 election, but I sometimes wonder if Obama's proposal amounts to too little, too late. First of all, the Republicans control the House and thus control the power of the purse; the Democratic Senate cannot produce expenditures on its own. Secondly, with the House already in Republican hands, the Senate may follow, given the whopping 23 seats Democrats have to defend next year - some of them rather vulnerable - versus the ten safe Republican seats up net year. Some Senate Democrats up for re-election in 2012 might be reluctant to back Obama's ideas if they think that will cost them votes. Thirdly, just the fact that the Republicans have moved the debate to government spending means that Obama's speech was as much a concession to that reality as it was a throwing of the gauntlet.

One mistake Obama made in his speech, by the way, was not in the message but the messaging. While he dropped his professorial tone, he said that, like Warren Buffett, he didn't need another tax cut. All he did with that remark was call attention to the fact he, too, has lots of money.

Neither Obama's plan nor Ryan's plan is likely to get us to fiscal stability; some of the numbers in either plan don't add up, and the future is too unpredictable to depend on to make any long-term fiscal plan work. But there is a difference between the Obama plan and the Ryan plan: The Obama plan is sane.