What Obama Needs to Do

Photos: Is Obama Keeping His Promises Saul Loeb / AFP-Getty Images

Two years into his presidency, Barack Obama remains a remote, even mysterious figure. It's not that he isn't familiar. If anything, he is over-exposed, a common sight on TV, speaking about this or that. But for all his constant presence, he is oddly irrelevant. He isn't a failure: Obama's mid-40s approval ratings, while lower than Dwight Eisenhower's ever were, are at least twice as high as those of Congress. But he's not a success, either. Although Obama has passed a massive health-care bill and finance reform in the last year, both bills are unpopular, among many experts as well as the citizenry—most of whom (the experts as well as the citizens) barely understand what the bills contain.

Should Obama try harder to play the Washington game? Be more of an LBJ or Bill Clinton? Temperamentally, he has little in common with either man; he is not a natural schmoozer or arm-twister. And even if he were, engaging the world of Washington pols and fixers and talking heads is an invitation to futility. Washington these days seems preoccupied with trivial pursuit and partisan advantage. Earlier this fall a legislator took me to peek into the senators' private dining room, where the solons can meet for lunch without the distraction of staff or anyone else. The cozy, ornate room used to be common ground for bipartisan friendship and dealmaking. On this Wednesday in September, with Congress in session, the table set, the soup hot on the table, the chamber was empty. "No one ever comes," explained the senator. "They're at their party caucuses or raising money."

Obama now has an opportunity to transcend this dispiriting scene, to reach beyond Washington and get the nation's attention. Last week the chairmen of the National Committee on Fiscal Responsibility and Reform offered a proposal to save the country from economic disaster—to face up to the country's looming and crippling national debt by raising taxes and cutting entitlements. House Speaker Nancy Pelosi immediately dismissed the plan as "unacceptable," but Obama counseled patience. "Before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts," he said. "If we are concerned about debt and deficits, then we're going to have to take actions that are difficult and we're going to have to tell the truth to the American people."

Now Obama needs to follow his own advice. His only hope to be an effective president, to secure his legacy, is to tell the whole truth about the deficit, the debt, and the only real way out—to be, as he put it, "straight" with the voters.

There may not be a single political professional in Washington who would agree with this advice. I've never met one. Generally, the suggestion that a politician call for tax increases and cuts in Social Security and Medicare is greeted with hoots of derision. Everyone seems to recall the last presidential candidate who called for a general tax increase (Walter Mondale in 1984) and what happened to him (he lost 49 states). But being honest about the real choices is the only way Obama can break through the noise and chatter. It is also absolutely necessary to save the country from very hard times ahead, or at the very least a steadily declining standard of living. Obama needs to start by explaining the mess we're in.

The best place to begin is to understand the gap between the money that the feds take in as revenue and the money that the government spends—for defense, or welfare benefits, or anything else. The simplest, most meaningful measure is revenues and outlays as a percentage of the economy. For the past 30 years or so, federal taxes have amounted to about 18 percent of the economy, and federal expenditures have equaled about 20 percent. The difference, the federal deficit, has been large but manageable.

But in 2009 the feds took in revenues amounting to about 15 percent of the economy, while spending about 25 percent of the economy. That 10-point gap is huge and unsustainable. True, an economic recovery will boost taxes. But the spending side will only go up and up. Why? Because the nation is aging. In 1960 there were five workers to support every person over 65. In 2040 there will be two workers to foot that bill. As baby boomers reach retirement, they will draw ever more heavily on Medicare and Social Security. Medicare costs routinely outpace inflation by a wide margin. Obama's recent health-care bill may slow that march, or it may not. The general feeling is that the bill failed to change the basic system that generates ever-higher costs.

Now, optimists will note that we've been here before: that deficits loomed large during World War II and in the 1980s. Both times we were rescued by economic growth—the postwar expansion of the middle class and the great Internet-fed boom (and bubble) of the '90s. The deficit became a surplus by 1998. Why won't that happen again? Congressmen are certainly praying for The Next Big Thing (green technology?) to help them avoid fiscal responsibility.

But very few economists believe that growth will solve the problem. Some warn of the "new normal," flat or at best slow growth or a decade of stagnation. A real growth spurt, in any case, will require government spending on badly deteriorating infrastructure and massive research and development. But there is no money—not in the federal treasury, nor at the state level. Thanks to massive (and largely unnoticed) giveaways to public-employee pension plans, big states like California, New York, and New Jersey are even closer to bankruptcy than the federal government. A column by David Brooks of The New York Times recently noted that New Jersey badly needs a new tunnel to New York, but can't afford it because the money has been spent on generous benefits for public employees. In California, the state is paying its bills with IOUs.

What will happen if the federal government simply does nothing—if it sits back and allows federal spending to increasingly outstrip revenues? Of course, the feds can always print more money, thereby reducing the debt as a percentage of the economy by simply inflating the dollar. But massive inflation is a curse. The last time inflation reached double digits in the United States, in the late '70s and early '80s, opinion polls measuring public satisfaction and optimism about the future plunged to levels rarely seen since World War II, and no wonder. Old folks on fixed incomes were badly hurt, and almost everyone feared their income would never catch up to rising prices. It could have been worse. Think of hyperinflation—say Argentina in the '80s, or Weimar Germany before Hitler in the '30s.

Only the president can make the case for sacrifice, and it won't be popular. As it is, most people already think they are doing their share by paying taxes and resent the idea of paying more, especially if their house is underwater, and they believe (rightly or wrongly) that financial geniuses on Wall Street are to blame. To call for sacrifice, the president will have to be willing to make a sacrifice himself. Obama can offer his own political career. He can put his reelection on the line. He can make the 2012 election a national referendum on doing the right thing.

I can hear the sneering of the political consultants. Voters want to hear about how the government is going to reduce unemployment, not stick them with higher taxes and fewer benefits. Obama and the Congress do need to tackle the jobs issue, and they need to spend the money to do it. But to be credible—and reassure the financial markets and the businessmen fearful of making long-term investments—those short-term spending boosts and tax cuts must be followed by greater long-term fiscal reforms. Politically, Obama will have to appeal to -bipartisanship—ideally, nonpartisanship. He will have to persuade Congress—which means getting Democrats to defy party orthodoxy by voting to cut entitlements and Republicans to do likewise by voting to raise taxes. There is an obvious and logical compromise, or at least an opening bid for bargaining: one dollar of spending cuts for every dollar of taxes raised.

To overcome opposition in both parties, Obama will have to go the people and win a national mandate. This is not a bad time to defy the political parties, which are in low repute. Fewer people identify themselves as Republicans or Democrats than at any time since polling began during World War II. The Republicans did well in the recent elections, but not so much because people flocked to the GOP. Rather, independents who voted for Obama in 2008 voted against Democratic incumbents.

It's true that one can look in vain in the history books for examples of presidents who boosted their popularity by demanding sacrifice. With the possible exception of FDR in wartime, presidents have been careful not to demand too much. And broadly speaking, American popular culture is not very amenable to sacrifice, to choosing the harder right over the easier wrong, as our sterner parents and grandparents might have said. We have built a society of safety nets, a lawyer-constructed web where no one really has to take responsibility, where there's always someone else to blame, where all the children are above average, or at least deserve a trophy for participation. (A friend recently observed a parent exclaiming to a child who had the wit to get off an escalator, "Great job!") But deep down, I think, people are perfectly aware that something needs to change. They have been learning, painfully, that housing prices do not go up forever, that homes are not limitless piggy banks. Kids may be accustomed to constant boosts to their self-esteem. But why, they wonder, is it getting so hard to get a job?

Obama can go a long way just by confronting, or simply acknowledging, reality. He can say, and easily show, that we must pay for the government we want, or get less government—or, more likely, do a little of both. Fortunately, when Obama is looking for role models, he has quite a few close at hand. Not the sort of people who build their existence on getting booked on O'Reilly or Olbermann. But rather two large and noble groups: people who serve in the armed forces and every parent who has sacrificed himself or herself for a child. Soldiers, sailors, and airmen routinely put their lives at risk for something other than the modest pay they get. Mothers sacrifice themselves—their sleep and careers and peace of mind—for their children on a daily basis, often without really thinking about it. In every case they are subordinating their physical and material well-being to something greater than themselves: the love of a child, or their comrades in arms, or their country.

They are willing to endure hardship—usually minor but sometimes severe—so that others who depend on them will be safe and secure. This is an ancient and honorable morality tale, and only President Obama can meaningfully deliver it to the whole country. By calling on what is best in us, and by offering up his own political future, Obama can show who he really is.