Is deficit compromise possible?

Despite sharply partisan reactions, President Barack Obama’s deficit plan may actually bring closer the compromise necessary to deal with the problem.

That’s true, even though Congress won’t enact his blueprint, which is more political than the Republicans’ more ideological plan. More and more, this looks like a battle that can’t be resolved before the 2012 election.

That’s because both Obama and Republican Rep. Paul Ryan, whose proposal was ratified last week by his House GOP colleagues, include provisions unacceptable to the other. But they also establish parameters that ultimately may lead to resolving their differences, though not before prolonged partisan squabbling and political gamesmanship.

Spending cuts

Despite increasing outside pressure, such as this week’s Standard & Poor’s warning, that seems unlikely to happen before Congress acts to raise the legal debt ceiling. That may require a deal cutting spending like last week’s compromise between Obama and the Republicans — and a decision by GOP leaders against forcing the ultimate showdown.

But it won’t solve the underlying deficit problem.

Ryan continues Republican refusal to consider tax increases and defense cuts. He relies too heavily on dismantling domestic programs that benefit poor and middle-class Americans. He would cut Medicare costs by shifting the long-term burden onto older Americans.

His plan is too unbalanced to pass without further GOP election victories.

Obama took the easier way out by ignoring the need to change Medicare and Medicaid and making political points to bolster support among Democrats and independents. While correctly calling for increased revenues, he proposed bigger tax increases than any Congress is likely to pass.

Still, Obama may benefit in a 2012 referendum between the two approaches.

Despite growing deficit concerns, public resistance to Medicare reductions could undercut support for Ryan’s plan. Significantly, while most GOP presidential candidates praised him for a serious effort to curb the deficit, they avoided endorsing his proposal to transform Medicare into a voucher program for buying private insurance.

Polls also show the public supports Obama on increasing taxes for wealthier Americans.

But initiatives by bipartisan groups — including Obama’s own debt commission — suggest ways to surmount these differences. Another indication may come when the bipartisan Senate “gang of six” presents its proposal, though it’s questionable that any plan could gain congressional approval now.

What these panels’ ideas could figure into is an eventual compromise, among them:

Taxes: Rather than another doomed battle to restore the higher pre-Bush rates for the wealthy, likelier alternatives could combine lowering all rates and eliminating costly tax preferences, such as exempting health insurance costs. Another option: reduce benefits for higher-income taxpayers from deductions for mortgage interest, charitable deductions and state and local taxes.

Social Security: Improving the system’s financial stability is easier than fixing Medicare or Medicaid. Possible ways include applying payroll taxes to more income, lowering cost-of-living adjustments by changing the way they are calculated, slowing benefit growth for wealthier recipients, increasing taxes on their retirement income and gradually raising the retirement age to 70.

Health Care: Any Medicare solution will reduce benefits and increase costs for wealthier retirees. Some would strengthen the authority of the independent board created under the Obama health plan to curb payments to doctors and benefits. Others include reforming medical malpractice laws, changing the Medicaid reimbursement system and imposing mandatory caps on total health care spending.

Spending cuts: Any self-enforcing mechanism requiring mandatory cuts if voluntary means fail would have to limit ways for Congress to evade restrictions. Caps would have to curb all discretionary spending — including defense — not just domestic programs as Republicans propose.

Barring an unexpected compromise, these issues seem headed for debate and possible resolution by the voters in 2012.

Carl P. Leubsdorf is the former Washington bureau chief of the Dallas Morning News. Distributed by McClatchy-Tribune Information Services.