From Obama’s speech:
It may be we can do it in stages. We’re going to solve this problem instead in several steps.
Last year, in 2011, we started reducing the deficit through $1 trillion in spending cuts. Those have already taken place. The agreement being worked on right now would further reduce the deficit by asking the wealthiest 2 percent of Americans to pay higher taxes for the first time in two decades. So that would add additional hundreds of billions of dollars to deficit reduction. So that’s progress, but we’re going to need to do more.
And I want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced, because, remember, my principle always has been let’s do things in a balanced, responsible way. And that means the revenues have to be part of the equation in turning off the sequester and eliminating these automatic spending cuts, as well as spending cuts.
Now, the same is true for any future deficit agreement. Obviously we’re going to have to do more to reduce our debt and our deficit. I’m willing to do more, but it’s going to have to be balanced. We’re going to have do it in a balanced responsible way. (emphasis mine)
This in unfortunate to say the least. Obama could have chosen this moment to basically declare victory on the deficit. He could have said that this roughly $700 billion in revenue, combined with previous cuts from earlier deals, savings from previous government freezes and potential Medicare savings resulting from Obamacare would together constitute having sufficiently “addressed” our long-term deficit for the time being.
Obama could have used this revenue-increasing deal to finally pivot to immigration, education, climate change, gun control or any of a dozen other issues that have been completely neglected while Washington has been overwhelmed with deficit hysteria. There is no shortage of more pressing problems in America that need to be dealt with. Instead Obama seems to be signalling that much of his second term is also going to be consumed with his desire to get a balanced deal to reduce the deficit, and in Washington “balanced deficit reduction” is basically the code word for cutting entitlements.
This potential revenue increase is not big enough to break Obama deficit fever.