Romer: What Obama Should Say About the Deficit

Christina Romer on President Obama's upcoming State of the Union address:

What Obama Should Say About the Deficit, by Christina Romer, Commentary, NY Times: ...My hope is that the centerpiece of the speech will be a comprehensive plan for dealing with the long-run budget deficit. ... The need for such a bold plan is urgent — both politically and economically. ...

So what should the president say and do? First, he should make clear that the issue is spending and taxes over the coming decades, not spending in 2011. Republicans ... have pledged to cut nonmilitary, non-entitlement spending in 2011... Such a step would do nothing to address the fundamental drivers of the budget problem, and would weaken the economy...

Instead, the president should outline major cuts in spending that would go into effect over the next few decades, and that he wants to sign into law in 2011. ...

President Obama needs to explain that ... there is no way to solve our budget problem without shared sacrifice. At the same time, he should ... ensure that spending cuts not fall on the disadvantaged.

Finally, the president has to be frank about the need for more tax revenue. ... The only realistic way to close the gap is by raising revenue. ...Congressional Republicans will have to come to terms with this fact...

None of these changes should be immediate. With unemployment at 9.4 percent and the economy constrained by lack of demand, it would be heartless and counterproductive to move to fiscal austerity in 2011. ... But legislation that gradually and persistently trims the deficit would not harm the economy today. ...

For me, Social Security is the wild card in all of this. Though it's far from the major underlying casue of the budget problem -- the recent agreement to extend tax cuts has a bigger impact on the budget than the projected Social Security shortfall (see here) -- it's an easy target. In a part of the article I left out, there is talk of "thoughtful ways to slow the growth of Social Security spending. Worries about where that will lead make me wary of getting behind these efforts.