Obama talks of Social Security reform commission

In an interview with the Washington Post editorial page editor Fred Hiatt, President Obama discussed his next steps on clsoig the fiscal gap once health care reform is addressed:

Hiatt: CBO and other economists say that, as you say, you can't solve the fiscal problem if you don't solve the health problem. But they also say that solving the health cost problem is not sufficient, that a big part of the issue is demographics and aging. And so -- and as you know, the 10-year budget shows the government raising 18 or 19 percent of [gross domestic product] in 2019, and spending 24 or 25 percent --

Obama: We have a structural gap that has to be closed.

Hiatt: So can I ask you how you think about the timing and politics of closing that structural gap?

Obama: What I think has to happen is if we can show that we have a disciplined health care reform package that is serious about cost savings and is deficit-neutral, you combine that with the pay-go rules that we have been promoting and I believe that we can get through Congress, and you are imposing some discipline on the appropriations process -- and I thought that the F-22 victory yesterday was a good example of us starting to change habits in Washington -- then I think we're in a position to be able to, either at the end of this year or early next year, start laying out a broader picture about how we are going to handle entitlements in a serious way.

It may start with Social Security because that's, frankly, the easier one. And I think that it's possible to also look at tax reform and think about are there ways that we can maybe even lower marginal rates but eliminate all the loopholes and have that a net revenue generator. I think there are going to be a bunch of things that we can take a look at, but I think health care reform combined with pay-go, combined with how we deal with appropriations bills over the next six months will help lay the foundation for us to be able to make some of these broader structural changes.

The challenge I've got, Fred, is that obviously -- our biggest problem right now in terms of short-term deficit is the recession. And nobody -- no economist I've talked to thinks that it would be wise for us to start early, start now, in reducing government outlays, when states are already cutting back drastically, and you'd have a hugely destimulative effect on the economy. But we have to begin to prepare on the midterm and the long term. And that's why I think health care reform is so important.

Hiatt: So but you'd start that in an election year and does that --

Obama: Well, probably what you end up having to do in terms of structural reforms realistically is you probably have to set up some sort of commission or mechanism that reports back with the prospect of maybe locking in a pledge for action, post election. I just think that's probably the most realistic thing that we can do.

And as I said before, the truth is you wouldn't want anything that would take effect until the economic recovery is much -- on much firmer footing anyway.

Hiatt: And you'd be willing to look at a commission -- I mean, beyond Social Security that sort of puts everything on the table?

Obama: Yes, I think everything is going to have to be on table. But here's my concern. If we are not able to get health care reform -- and, Fred, I just want to be frank with you at this point that this is why I think that if you're a deficit hawk like you, you should actually be -- you should be hard on sort of the product, but you should be encouraging on the process, because the fact of the matter is, is that if health care reform fails, there is no way that Congress is going to take up a serious effort to control health care inflation -- there's no way that we're going to pass the kinds of changes we've already talked about in Medicare, for example, in the absence of a more comprehensive reform package. And so what we're going to have is a situation in which it's just business as usual for, I think, the next four years at minimum, and maybe the next eight -- in which case, the problem is just going to keep on getting worse and worse.

Also see Reuters, "Obama: Social Security, Medicare reform on agenda."