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‘Grand bargain’ on deficit reduction: RIP?

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“Obama appears to have decided that there is no possibility of resolving the larger fiscal issues on terms that he and his party would find acceptable,” writes Mr. Galston, a scholar at the Brookings Institution in Washington. “So he will hand these issues off to the next president, who will no longer enjoy the luxury of delay.”

In his address, Obama spoke of the need for “modest reforms” in Medicare, without elaboration. More clear is what he opposes. He rejects raising the age of Medicare eligibility above 65, his spokesman said Monday. In his speech, Obama rejected any cuts to Medicare or Social Security as part of a deal to get around the deep cuts in defense spending in the March 1 “sequester.”

Obama also departed from his prepared text to suggest that deficit reduction is not the urgent matter some make it out to be.

“Why is it that deficit reduction is a big emergency, justifying making cuts in Social Security benefits, but not closing some loopholes?” Obama said.

That added line, in fact, alarmed some on the left by raising the idea that cuts to Social Security could be part of the solution to over-large deficits. The sensitivity on both sides is palpable.  

The Republicans, for their part, have also shown no willingness to make a “grand bargain.” They say they’re done with tax increases, after conceding in the Dec. 31 fiscal cliff deal to a tax rate hike on the top 0.7 percent of taxpayers.

Obama made a raft of proposals in his State of the Union address that involve government spending, including expanding access to preschool; creation of “manufacturing innovation institutes;” and a “Fix-It-First” program to repair the nation’s deteriorating infrastructure. And he promised not to add a dime to the deficit.

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