No matter who is elected president this November, Democrats and Republicans might be much closer to a "grand bargain" budget deal in the next Congress than election year politics indicate.
Examination of the Obama and Rep. Paul Ryan (R-Wis.) budgets reveal a significant amount of agreement on what the nation needs to do in order to get its finances in order. Budget experts on both sides of the aisle assert consensus is possible in three areas: 1) reforming Medicare and Medicaid – to reduce their rate of growth, 2) increasing tax revenues by eliminating deductions and changing overall rates, and 3) cutting some programs and reducing the rate of growth in many others.
"You would never know from the rhetoric in President Obama's budget speech that there are broad swaths of government policy on which he and Paul Ryan mostly agree," Ezra Klein, a liberal columnist for The Washington Post, wrote April 4.
Both budgets propose to cut government spending across a wide range of programs. Under the Budget Control Act passed by both parties last summer, $1 trillion of deficit reduction is already set to go into effect. Both Obama and Ryan have proposed cutting some programs and reducing the growth of others on top of that.
There are differences. One is that Ryan achieves all of his deficit reduction through those cuts, or reductions in growth, while Obama has some additional revenue increases. But even those revenue increases, from increasing taxes on families earning more than $250,000 per year and eliminating some corporate tax deductions, are not a dramatic change. The top rate would only increase from 35 percent to 39.6 percent – the same as it was in the 1990s, and still much lower than the 50 percent rate in the 1980s or the 70 percent rate in the 1960s-70s.
Even Obama's much ballyhooed "Buffett rule," which would require anyone making over $1 million to pay a minimum 30 percent tax rate, would only raise about $5 billion a year in additional revenue (because most millionaires already pay more than 30 percent).
Meanwhile, despite what Democrats say, Ryan's budget is modest in its approach to deficit reduction. (For some, this is exactly what is wrong with it.) An additional $3 trillion would still be added to the national debt under Ryan's plan.
The Ryan budget does make some changes to Medicare not included in the Obama budget. (The eligibility age increases, and seniors would be provided a voucher in which they can purchase health insurance in the private market.) But spending on Medicare, the biggest driver of the federal debt, increases at about the same rate under both budgets.
Both budgets, likely because of the election, are conspicuously missing key elements of fiscal stability.
Neither budget addresses Social Security deficits. FICA, the Social Security payroll tax, is not raising enough revenue to pay current beneficiaries, and there is no expectation that it will in the near future without substantive changes to the program. Congress and the president even exacerbated the problem this year, in a bipartisan vote, when it extended a temporary cut in the payroll tax.
The Congressional Budget Office estimates that the nation would never reach a balanced budget under Obama's plan. But the date that the Ryan budget reaches balance is so far away, in the 2030s, that it lacks relevance.
Despite the fact that both sides came extremely close to agreeing on this framework last summer in the "grand bargain" budget negotiations between President Obama and House Speaker John Boehner, both parties are currently in election year mode and arguing that their visions are wildly different.
"I'm excited about going to the country with a choice of two futures," House Budget Chair Ryan said April 1 on ABC's "This Week."
Obama agreed in an April 4 speech: "I can't remember a time when the choice between competing visions of our future has been so unambiguously clear."
The theme was echoed again the next day by Romney, the likely Republican presidential nominee, in a speech before the same group of reporters that Obama spoke to.
"I'm offering a clear choice and a different path," he said. "This November, we will face a defining decision." And, "I am offering a real choice and a new beginning."
Rhetoric aside, the reason a budget deal is in the offing is simple – neither side has other options. Next year's president, constrained by budget realities and leading a government that requires supermajorities for large-scale reforms, will necessarily gravitate toward the bipartisan consensus that is already forming.